Q2 2026 Canopy Growth Corp Earnings Call

And I will be your conference operator today I would like to welcome you to canopy Growth's second quarter fiscal 2026 financial results Conference call. Currently all participants are in a listen only mode.

I will now turn the call over to Tyler Burns director of Investor Relations.

You may begin the conference call.

Good morning, and thank you for joining us on our call today, we have canopy Growth's, Chief Executive Officer, Luc Mojo and Chief Financial Officer, Tom Stewart.

Speaker #1: Good morning . My name is Joanna and I will be your conference operator today . I would like to welcome you to Canopy Growth's second quarter fiscal 2026 financial results conference call .

Before financial markets opened today and that would be growth issued a news release announcing the financial results for our second quarter fiscal 2026 ended September 32025.

Speaker #1: Currently , all participants are in a listen only mode . I will now turn the call over to Tyler Burns director , Investor Relations .

The news release and financial statements have been filed on Edgar and SEDAR and will be available on our website under the investors tab.

Speaker #1: Tyler , you may begin the conference call .

Speaker #2: Good morning , and thank you for joining us on our call today . We have Canopy Growth's chief executive Officer , Luc Mongeau and Chief Financial Officer Tom Stewart .

Before we begin I would like to remind you that our discussion during the 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.

Speaker #2: Before financial markets open today, Canopy Growth issued a news release announcing the financial results for our second quarter fiscal 2026, ended September 30, 2025.

Speaker #2: The news release and financial statements have been filed on Edgar and Cd-R that will be available on our website under the investors tab .

Please review today's earnings release, and canopies reports filed with the SEC and SEDAR for various factors that could cause actual results to differ materially from projections. In addition, reconciliations between any non-GAAP measures to their closest reported GAAP measures are included in our earnings release.

Speaker #2: Before we begin , I would like to remind you that our discussion during the 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 note that all financial information is provided in kenny's dollars unless otherwise stated.

Speaker #2: Please review today's earnings release and Canopy's reports filed with the SEC and Cder for various factors that could cause actual results to differ materially from projections .

Following remarks by Luc and Tom We will conduct a question and answer session, where we will take questions from analysts with that I'll turn the call over to Luke.

Good morning, everyone and thank you for joining us today.

Speaker #2: In addition , reconciliations between any 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 , unless otherwise stated .

It's great to be with you again to share the continued progress we're making in building a competitive.

Profitable and.

Trusted leader in the global cannabis market.

Speaker #2: Following remarks by Luke and Tom , we will conduct a question and answer session where we will take questions from analysts . With that , I'll turn the call over to Luke .

The second quarter.

One of our strongest to date.

Reflecting real measurable progress driven by our continued disciplined focus on fundamentals.

Speaker #2: Good .

Speaker #3: Morning everyone , and thank you for joining us today . It's great to be with you again to share the continued progress we're making in building a competitive , profitable and trusted leader in the global cannabis market .

Q2 highlights include the continued momentum in our Canadian adult use cannabis business.

Consistent growth in our Canadian medical cannabis business, and a stronger and significantly healthier balance sheet.

Speaker #3: The second quarter was one of our strongest to date , reflecting real , measurable progress driven by our continued disciplined focus on fundamentals .

Together these actions give me confidence in our ability to sustain progressive deliberate results for quarters to come.

Speaker #3: Q2 highlights include a continued momentum in our Canadian adult use cannabis business , consistent growth in our Canadian medical cannabis business , and a stronger and significantly healthier balance sheet .

So I think though what Canadian adult use cannabis business.

Net revenue increased 30% year over year in Q2.

Driven by demand, probably Claiborne infused pre rolls and our new OLED <unk> from tweet on seven acres.

Speaker #3: Together , these actions give me confidence in our ability to sustain progress and deliver results for quarters to come . Turning to our Canadian adult use cannabis business , net revenue increased 30% year over year in Q2 , driven by demand for our Claiborne infused pre-rolls and our new all in one vapes from Tweed and seven acres .

Stronger relationships with Canadian boards large accounts and they put it.

Independent retailers drove continued distribution gains.

Fluid, Inc, a 20% year over year distribution increase.

Alberta independent retailers.

We also improve our service levels.

With idle time.

Fulfill rates across key accounts, reinforcing our reliability with retail partners.

Speaker #3: Stronger relationships with Canadian boards , large accounts and independent retailers drove continued distribution gains , including a 20% year over year distribution increase amongst Alberta independent retailers .

For the six months period, ending September 32025.

Revenue is up 37%.

Compared to the same period last year.

This growth reflects the renewed momentum of our adult use cannabis business. Following the actions taken earlier this year to tighten our product portfolio.

Speaker #3: We also improved our service levels with iron , Thyme , iron , fulfill rates across key accounts , reinforcing our reliability with retail partners for six month period ending September 30th , 2025 .

If I had to execution with boards and retailers and refine our sales model.

Looking ahead.

Speaker #3: Revenue is up 37% compared to the same period last year . This growth reflects the renewed momentum of our adult use cannabis business following the actions taken earlier this year to tighten our product portfolio , streamline execution with boards and retailers , and refine our sales model .

We're building this momentum with additional Claiborne innovation.

<unk> genetics across our core four flower portfolio at P. R J brands and plans to reach a broader group group of consumers later this year.

We're also elevating our cultivation standards.

Including manual OLED refi post orbit processes to deliver superior flower.

Speaker #3: Looking ahead, we're building on this momentum with additional Claiborne innovation unit genetics across our core flower portfolio and PR brands. We plan to reach a broader group of consumers later this year.

Consumers experience the very best of what <unk> has to offer.

And our Canadian medical cannabis business.

Revenue grew 17% year over year, marking another consecutive quarter of growth.

Speaker #3: We're also elevating our cultivation standards , including manual and refined post-harvest processes , to deliver superior flower . Ensuring consumers experience a very best of what canopy has to offer .

We're staying true to our medical strategy.

The right products at the right price consistently in stock and for the right patient segments.

During the quarter, our BC Dorje site became indexes of medical and cultivation facility.

Speaker #3: In our Canadian medical cannabis business . Net revenue grew 17% year over year , marking another consecutive quarter of growth . We're staying true to our medical strategy , offering the right products at the right price , consistently in stock and for the right patient segments .

Using craft and small batch cannabis dedicated.

Two spectrum patients.

Well Jos also exclusively and bulking it had trimming all product.

Which is a deliberate investment to drive quality consistency and the spectrum patient experience.

Speaker #3: During the quarter , our BC Doja site became an exclusive medical cultivation facility producing Kraft and small batch cannabis dedicated to spectrum patients .

We're also seeing continued growth among <unk> patients.

Registration.

20% year over year, and almost tripling since 2021.

This continued growth speak to the reliability and care within our medical business.

Speaker #3: Dojo is also exclusively and booking and hand trimming all product , which is a deliberate investment to drive quality and consistency in the spectrum .

Delivering a superior patient experience remains central to all we will go to you to growing this business. Despite proposed government changes to Medicare reimbursement.

Speaker #3: Patient experience . We're also seeing continued growth among insured patients with registration up 20% year over year and almost tripling since 2021 . This continued growth speaks to the reliability and care within our medical business .

In international markets.

Lee I am disappointed with our performance during the quarter.

Net revenues declined $3 million.

The performance in Europe was primarily the result of supply constrained and internal process challenges.

Lauer stores sales in Europe did not meet the required quality standards.

And then turtle process gaps limited our ability to deliver supplies to Germany from a Canadian GMP facilities.

I want to be clear.

And it would be growth is fully committed to the European market.

We have already Bob.

Boswellize, a dedicated effort to improve supply chain execution, which includes daily management oversight of logistics product Roadmaps and licensing.

We expect operations to stabilize our began improving as we exit exit the fiscal year with international markets remaining a key part of our path to profitability.

That's sort of the vehicle the launch of the New Z E.

Z Vaporizer was received with great enthusiasm by consumers globally and generated early sales momentum, helping contribute to sequential quarter over quarter revenue growth.

While <unk> contributed three weeks our performance during the quarter were seeing positive signals into Q3, and together with all of the seasonality expect continued growth through the remainder of the year.

Looking ahead I am encouraged by the momentum that stores in vehicle.

The team's commitment to pursue precision engineering medical grade quality and design excellence continues to set the brand apart and Thats, what will drive performance in the long run.

On our priority expenses.

SG&A savings program launched earlier this fiscal as delivered over 21 million in annualized savings.

Supplier, surpassing our $20 million target ahead of schedule.

As we build a culture of fiscal responsibility.

<unk> continues to identify additional savings opportunities, while delivering top line growth.

On profitability, we made strong progress this quarter with margin expansion and disciplined cost management, that's moving us closer to positive adjusted EBITDA.

We're also taking further steps to meaningfully lower our cost of goods sold through streamlining processes.

Smart investment to deliver improved yield and quality as well as tight or supplier management.

Before I close I'd like to touch on the Canadian Federal government's recent proposal to reduce reimbursement for veterans, who use crest <unk> medical cannabis.

These proposed changes of the potential to seriously and Buck access and quality of the care and services that veterans of come to rely on.

As one of Canada's leading medical cannabis providers.

We believe consistency and fairness and access to care is critical.

We're continuing to assess the proposed changes and are engaging across the country to ensure that needs of patients remain front and center.

In closing.

Q2 demand strayed, a continued progress across our core businesses.

The positive momentum in our Canadian medical adult adult use businesses at <unk>.

Expanded product lineup at stores that vehicle.

And it's Eric should plan underway to improve execution in our international markets to drive future success.

As we further sharpened our focus on quality patient and consumer experiences and disciplined execution.

<unk> would have the right strategy focus and team to become a trusted global provider of elevated cannabis experiences.

Thank you.

Now I'll turn the call over to Tom to walk through the financial results in more detail.

Thank you Luke and good morning, everyone.

I am proud of our disciplined execution, including stronger financial performance rigorous cost saving initiatives significantly deleveraged balance sheet and sustained cash flow improvements.

Our adjusted EBITDA loss narrowed significantly year over year, driven by growth in the Canadian cannabis business, along with lower SG&A expenses and efficiency gains.

As a result of the progress made we have eliminated the conditions that once raise substantial doubt about the company's ability to continue as a going concern.

This is a significant accomplishment for canopy growth.

We had $298 million of cash and cash equivalents as of September 32025, which exceeded that balances by $70 million.

During Q2, we prepaid $50 million U S dollars on our senior secured term loan capturing roughly $6 5 million U S dollars in annualized interest savings as a reminder, the company has no significant debt maturities prior to September 2027.

Moving to our detailed segment results and starting with canvas.

Q2, cannabis net revenue was $51 million up 12% compared to a year ago.

This growth was led by the Canadian adult use business up 30% year over year, primarily driven by strong consumer demand for our Claiborne infuse pre rolls and our new tweet all in one day offerings.

And in a medical also continued to perform well up 17% from the prior year supported by growth in patient registrations larger water volumes and a broader assortment of products on our spectrum therapeutics store.

International cannabis sales underperformed during Q2 decreased from 39% funded prior year, which was driven by supply challenges.

While we expect this decline in sales to improve in the back half of the year, we are proactively identifying opportunities to mitigate the near term impact on revenue and preserve our focus on consolidated profitability.

<unk> gross margin in Q2 was 31% down year over year, but up sequentially from 24% in Q1.

The sequential improvement in cannabis gross margin primarily reflects the impact of price increases on select Canadian products improved sales mix within Canada and improvements to flower and fulfillment costs.

These improvements were partially offset by the previously discussed European underperformance and inventory provisions.

I will now speak about the performance of our stores in the medical segment.

<unk> net revenue in Q2 was $16 million up 5% sequentially driven by strong consumer demand for the new vesey pay pricing.

Year over year revenue declined 10% as the prior year period benefited from strong <unk> and <unk> sales as well as strong performance on the back of a favorable German regulatory reforms.

Stores in Deco gross margins increased to 38% in Q2 compared to 32% in the prior year period.

Gross margins in the prior year were adversely impacted by discounts provided to clear off the remaining 90 stock which was retired in favor of a mighty plus device.

Moving onto operating expenses.

SG&A expenses in Q2 declined 13% year over year, reflecting disciplined cost management and the benefits of our ongoing restructuring program.

The decline in SG&A expenses year over year was primarily driven by reductions in head count and professional fees, partially offset by higher investments in advertising and promotions made in support of new product launches that occurred during the quarter.

Gross margins in the prior year were adversely impacted by discounts provided to clear out the remaining mighty stock, which was retired in favor of the Mighty plus device.

Moving onto operating expenses.

Since launching our cost saving initiatives in March we have achieved $21 million in annualized savings exceeding our initial $20 million target.

SG&A expenses in Q2 declined 13% year over year, reflecting disciplined cost management and the benefits of our ongoing restructuring program.

We are continuing to identify and implement additional cost reductions to further improve our structure, while ensuring no disruption to our core capabilities and ability to execute in key markets.

The decline in SG&A expenses year over year was primarily driven by reductions in head count and professional fees, partially offset by higher investments in advertising and promotions made in support of new product launches that occurred during the quarter.

Turning to adjusted EBITDA, our Q2 loss was $3 million compared to a loss of $6 million a year ago.

Since launching our cost saving initiatives in March we have achieved $21 million in annualized savings exceeding our initial $20 million target.

Year over year improvement was driven in part by the positive impact of our lower cost base and improved margins, partially offset by the negative impact of lower international cannabis revenues and inventory provisions.

We are continuing to identify and implement additional cost reductions to further improve our structure, while ensuring no disruption to our core capabilities and ability to execute in key markets.

I'd like to now review our cash flow free.

Free cash flow was an outflow of $19 million in Q2 fiscal 'twenty down from an outflow of 56 million in the same period last year.

Turning to adjusted EBITDA, our Q2 loss was $3 million compared to a loss of $6 million a year ago.

The year over year decrease in free cash flow is primarily driven by a reduction in cash interest payments as a result of our debt pay downs as well as year over year improvements in working capital.

The year over year improvement was driven in part by the positive impact of our lower cost base and improved margins, partially offset by the negative impact of lower international cannabis revenues and inventory provisions.

For fiscal 'twenty, we expect to achieve significant improvement in free cash flow driven primarily by a reduction in cash interest costs due to lower debt balances.

I'd like to now review our cash flow.

Free cash flow was an outflow of $19 million in Q2 fiscal 'twenty six down from an outflow of $56 million in the same period last year.

Management of working capital and improved financial performance.

I'd like to now provide our outlook and priorities for the remainder of fiscal 'twenty and.

The year over year decrease in free cash flow is primarily driven by a reduction in cash interest payments as a result of our debt paydowns as well as year over year improvements in working capital.

Our cannabis business, we expect improved performance in our Canada adult use channel over the remainder of fiscal 'twenty six driven by a robust innovation pipeline, a focused product formats and tighter alignment with cannabis boards and retailers.

For fiscal 'twenty, six we expect to achieve significant improvement in free cash flow driven primarily by reduction in cash interest costs due to lower debt balances tighter management of working capital and improved financial performance.

We will continue to monitor developments around the Canadian federal government's propulsion proposed changes to the medical cannabis reimbursement program for veteran in our CMT patients.

I'd like to now provide our outlook and priorities for the remainder of fiscal 'twenty six.

And our cannabis business, we expect improved performance in our Canada adult use channel over the remainder of fiscal 'twenty six driven by a robust innovation pipeline, a focused product formats and tight alignment with cannabis boards and retailers.

As more information becomes available and should the budget passed we will assess its impact on our business and what our next steps may be.

Excluding any impact of these potential changes we would expect we would expect Canada medical cannabis topline to continue to grow in the back half of fiscal 'twenty six.

We will continue to monitor developments around the Canadian Federal government's proposed proposed changes to the medical cannabis reimbursement program for veteran an Rcmp patients.

In international markets cannabis, we are focused on stabilizing and realigning operations in Europe.

For the remainder of fiscal 'twenty six we expect revenue in the region to remain generally consistent with the second quarter levels with growth expected as we exit the fiscal year.

As more information becomes available and should the budget passed we will assess its impact on our business and what our next steps may be.

Excluding any impact of these potential changes we would expect we would expect Canada medical cannabis topline to continue to grow in the back half of fiscal 'twenty six.

In Australia, we anticipate that our recently launched flower products and upcoming new format introductions.

<unk> continued sequential growth in the second half of the fiscal year.

In international markets cannabis, we are focused on stabilizing and realigning operations in Europe.

The stores in backhaul, we expect stronger performance over the remainder of fiscal 'twenty six driven by the successful launch of the VZ at the end of our second quarter. That's one of the strength coming from the holiday selling season.

For the remainder of fiscal 'twenty six we expect revenue in the region to remain generally consistent with the second quarter levels with growth expected as we exit the fiscal year.

However, the year over year comparisons are likely to be challenged due to the ongoing economic uncertainty that exist, particularly in the U S and the negative impact this is having on consumer sentiment.

In Australia, we anticipate that our recently launched flower products, along with upcoming new format introductions will support continued sequential growth in the second half of the fiscal year.

While U S tariffs of ink have created pressure on <unk> profitability, we remain focused on mitigating their impact through disciplined cost management and operational efficiencies.

The storz <unk> Bickel, we expect stronger performance over the remainder of fiscal 'twenty six driven by the successful launch of the VZ at the end of our second quarter as well as strength coming from the holiday selling season.

Turning to candidates gross margins, excluding the potential impact of Canadian medical reimbursement levels, we expect sequential improvement in Canada as gross margins over the remainder of fiscal 'twenty.

However, the year over year comparisons are likely to be challenged due to the ongoing economic uncertainty that exists, particularly in the U S and the negative impact this is having on consumer sentiment while.

Driven by top line growth and additional production efficiencies and cost savings.

While U S tariffs of eight have created pressure on stores in pickles profitability, we remain focused on mitigating their impact through disciplined cost management and operational efficiencies.

Our outlook for store pickup gross margins, we expect sequential improvement over the remainder of fiscal 'twenty, six driven primarily by top line growth and cost savings initiatives.

Turning to cannabis gross margins, excluding the potential impact of Canadian medical reimbursement levels, we expect sequential improvement in cannabis gross margins over the remainder of fiscal 'twenty, six driven by topline growth and additional production efficiencies and cost savings.

As we move into the second half of the year, our priorities remain firmly grounded in execution efficiency and disciplined financial stewardship. The deliberate actions, we have taken to improve our operations launch exciting new products in core categories strengthen the balance sheet and reduce costs have materially reinforced canopies.

And our outlook for Storz <unk> Bickel gross margins, we expect sequential improvement over the remainder of fiscal 'twenty, six driven primarily by top line growth and cost savings initiatives.

Nation for long term stability and growth.

This concludes my prepared remarks, we will now take questions.

As we move into the second half of the year, our priorities remain firmly grounded in execution efficiency and disciplined financial stewardship. The deliberate actions, we have taken to improve our operations launch exciting new products in core categories strengthen the balance sheets are reduced costs have materially reinforced canopies foundation.

Thank you.

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.

Comps that you had has been raised if you wish to claim from the polling process. Please press star followed by the Q.

For long term stability and growth.

If you IFC speaker phone please lift the handset before pressing any keys.

This concludes my prepared remarks, we will now take questions.

We do ask that you. Please limit yourself to two questions should you have additional questions. You May press star one again to be join the question queue.

Thank you.

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.

The first question comes from Bill Quirk.

Capital Partners. Please go ahead.

We'll hear comps that you had has been waste if you wish to the claim from the polling process. Please press star followed by the Q. If you are using a speakerphone. Please lift the handset before pressing any case we.

And good morning, everybody at Luke you talked about the supply chain challenges impacting international I know you mentioned quality standard.

But what specifically do you have to change to reopen that pipeline and its the solution going to be more costly than the prior product path into the German market.

We do ask that you. Please limit yourself to two questions should you have additional questions. You May press star one again to be join the question queue.

The first question comes from Bill Cook at Roth Capital Partners. Please go ahead.

Okay.

Good morning, Thank you for the.

The question.

Good morning, everybody at Luke you talked about the supply chain challenges impacting international I know you mentioned quality standards.

Let me just give you a bit more bulk contact sandi, so a bit of business with nine months, we've pretty much started the transformation of the organization on day one.

What specifically do you have to change to reopen that pipeline and its the solution going to be more costly than the prior product path into the German market.

I'm thrilled.

Overwhelmingly with everything Thats happening in the business that we see it in the results to date. So we're we're driving growth.

Okay.

Good morning, Thank you for the.

Add in medical and adult use.

<unk>.

Let me, let me just give you a bit more bulk context.

Business.

Margin is improving sequentially cost control.

<unk> a bit the business with nine months, we've pretty much started the transformation of the organization on day one.

We're well ahead of our objective.

Total debts, and chasing or or our supply chain is improving as I said Europe.

Trailed.

Overwhelmingly with with everything Thats happening in the business that we sit in the results to date. So we're we're driving growth.

Sadly I am disappointed and I thought we would be ahead of the transformation.

And medical and adult use.

That being said.

Business.

We're on it.

Margin is improving sequentially cost control.

We've moved to <unk> as I've mentioned, a daily management oversight.

We're well ahead of our objective.

Of the situation.

Targets at chasing or or our supply chain is improving as I said Europe.

We're retooling.

The route to market.

And to add and we're making significant.

Sadly I'm disappointed and I thought we would be ahead of the transformation.

Progress let me now today is specific to your question so where.

That being said.

We're on it.

Or are retooling to a place where we will be able to satisfy European demand.

We've moved to <unk> as I've mentioned, a daily management oversight.

Of the situation.

For the foreseeable future probably aid yet.

We're retooling.

P facilities.

Yeah.

The route to market.

So Tom please feel free to jump in while I'm, Doug, but I do not see any increases in the cost of the floor word that we will be providing to.

And to add and we're making significant progress let me get now to the specific of your question. So we're retooling to a place where we will be able to satisfy European demand.

To Europe, so we should be able to achieve superior margin.

They're in the quarters to comment at all as we are.

For the foreseeable future.

GMP facilities.

See us.

The outlook for me as a much stronger position as we exit.

Please feel free to jump in while I'm, Doug, but I do not see any increases in the cost of the floor. We are that we will be providing two two.

Fifth call fiscal year, so Tom anything to add.

No I think the only only thing I would say, there's not a lot of additional investment this is about execution.

To Europe, so we should be able to achieve superior margins.

Asset.

We have today. So we also need to make sure we're.

Sure.

In the quarters to call, but as we are.

We have a proper supply coming out of <unk> current but overall this is a story of execution and Luke and I are managing this quite closely.

I see us.

The outlook for me as a much stronger position as we exit.

The fiscal our fiscal year, so Tom anything to add.

Okay, and if I may add.

As you can see by the amount of time, we're expecting of this this is extremely important to us and we're extremely close.

No I think the only only thing I would say, there's not a lot of additional investment. This is about execution with the assets that we have today. So we also need to make sure we're.

Situation, we're expanding.

Albert of strains, we are growing for Europe, which allows us to broaden our portfolio of products significantly.

We have a proper supply coming out of kick garnered but overall this is a story of execution and Luke and I are managing this quite closely absolute data if I may add.

At the same time, we are making.

Our distribution.

As you can see by the amount of time, we're spending up. This this is extremely important to us and we're extremely close to situation we're expanding.

Retail.

I'll frame.

In Europe, which as well, we'll open up the bucket for us quite significantly.

Number of strains we are growing for Europe, which allows us to broaden our portfolio of products significantly.

Thank you. Thank you for that both and then Tom the ATM was used pretty aggressively into Q can you talk about the decision to use it now and in that size and then given the magnitude in the quarter. How should we think about issuance going forward is it done.

At the same time, we are broadening.

Distribution.

Retail.

Offering.

Yes, so I would say, we're continuously evaluating our capital requirements and funding strategies.

In Europe, which as well, we'll open up the market for us quite significantly.

To ensure we have an optimal.

Thank you. Thank you for that both and then Tom the ATM was used pretty aggressively in <unk> can you talk about the decision to use it now and in that size and then given the magnitude in the quarter. How should we think about issuance going forward is it done.

Capital structure.

The balance is cost efficiency with financial flexibility.

You know you are aware, we launched a new program at the at the end of August ultimately for US we want to make sure we have that optionality in the market.

I think it would be.

Yes, so I would say, we're continuously evaluating our capital requirements and funding strategies.

It wouldn't be appropriate to speculate on how it would be use we have the program in place to the extent, we need to draw on it but we're active prudently with those proceeds.

Sure we have an optimal.

Capital.

Structure.

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

And the balances cost efficiency with financial flexibility.

You know you are aware, we launched a new program at the at the end of August.

Hi, Thank you for the questions first question for me just wanted to double back on International I know, we've talked about it you know in the past just wanted to bring it up again in terms of your current supply chain or are they still happy with.

Ultimately for US we want to make sure we have that optionality in the market.

I think it would be.

It wouldn't be appropriate to speculate on how it would be use we have the program in place to the extent, we need to draw on it but we're active prudently with those proceeds.

Some reliance on third party product.

You guys have some you don't probably you can also export internationally do you feel like there is any need to increase the <unk> that you have to supply in international market because of some of the supply chain issues or do you feel like theres still a lot of opportunity to find quality product efficiently meet the potential demand in international markets.

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

Hi, Thank you for the questions first question for me just wanted to double back on International I know, we've talked about it you know in the past just wanted to bring it up again in terms of your current supply chain related still happy with some reliance on third party products. Obviously, you guys have some of your own probably can also.

Yes, some of them were thank you for the question already good.

Some of the challenges came from flowers source of.

Export internationally do you feel like there is any need to increase the <unk> that you have to supply international markets because of some of the supply chain issues or do you feel like Theres still a lot of opportunity to find quality product to sufficiently meet the potential demand in international markets.

Out of Portugal, So where we are out of this right now as I said.

Earlier, we have plenty of capacity within our all G&P Canadian GMP facilities. So we're confident that we will be able to supply from our own.

Yes, some of our thank you for the question Eric Good morning.

Source growth floor or not.

The challenges came from flowers source of.

Writing off.

<unk> third party <unk>.

Power in the future, but right now were really retooling.

Out of Portugal, So where we're out of this right now as I said earlier, we have plenty of capacity within our all in G&P Canadian GMP facilities. So we're confident that we will be able to supply from our own source of growth.

The entire route to market with our own growth flower, which we have enough capacity for the foreseeable future.

Okay, great Thanks that Luke.

Thank you made some nice progress on the profitability.

And you mentioned.

Floor, where we are.

Continued progress towards positive EBITDA any update in terms of from the key levers and timing of when you might expect to get to profitability I know something you guys have.

Not of writing.

Writing off.

Having third party flower in the future, but right now were really retooling the.

Intaglio route to market with our own growth flower, which we have enough capacity for the foreseeable future.

Stopped doing in terms of timelines, but fair to say you'd be disappointed if it.

Didn't achieve it in sometime in calendar 2026 fiscal year at the back half of unethical weekend. Thanks.

Okay, great Thanks that Luke.

Second you made some nice progress on the profitability.

I would say Erin we're controlling what we can control right now.

You mentioned.

Cost savings measures were taken we know well empower us to to get to a improved adjusted EBITDA performance.

Continued progress towards positive EBITDA.

In terms of some of the key levers and timing of when you might expect to get to profitability. I know, it's something you guys have stopped doing in terms of specific timelines, but fair to say you would be disappointed if you didn't achieve it in sometime in calendar 2026, your fiscal year or the back half or front half from 27.

It's too early to speculate at this point in terms of when that would be but I think as you can see from the results. This has been our strongest quarter.

While albeit of lawsuits are narrower.

<unk> loss that we've had to.

To date in my recent memory. So I think the changes we're making in the organization is going to fully support that and well.

I would say Erin we're controlling what we can control and right now the cost savings measures for taken we know will empower us to to get to a improved adjusted EBITDA performance I think it's too early to speculate at this point in terms of when that would be but I think as you can see from the results. This has been our strongest quarter.

Pushing as much speak out here, if I may add on top of this.

Positive adjusted EBITDA as our main and remains our main priority. That's why we're over indexing and really retooling Europe to make sure we fired on all cylinders.

While albeit a loss it's our it's our narrowest loss that we've had to.

To date in my recent memory. So I think the changes we're making in the organization that is going to fully support that and well.

Ladies and gentlemen.

Do you have any questions. Please press star one. The next question comes from Federico Gomez at HEB capital markets. Please go ahead.

Pushing as much as we can here if I may add on top of this.

Morning, Thanks for taking the questions.

Positive adjusted EBITDA as our main it remains our main priority. That's why we're over indexing and really retooling Europe to make sure we fired on all cylinders.

First question just.

Given the growth that you're seeing in air Canada's platform, you're on your outlook for radical genes into medical International medical as well how are you looking at your capacity right now and do you foresee any any need to invest in additional capacity I guess in your acute care like meaningful investments.

Ladies and gentlemen, as a reminder, if you have any questions. Please press star one. The next question comes from Federico Gomez at HEB capital markets. Please go ahead.

That keeps growing.

Good morning, Thank you for the question.

Morning, Thanks for taking the questions.

As I mentioned, we're doing smart investments to really unlock yield and quality of the flowered at world growing in our own facility.

First question just.

Given the growth that you're seeing in air Canada's platform, you're on your outlook for Fortinet bookings they need a medical international medical as well how are you looking at your capacity right now do you foresee any any need to invest in additional capacity I guess menu future like meaningful investments it's been busy.

Facilities.

We've looked at this large and why we're confident with limited investment.

That we can meet the demand.

<unk> keeps growing.

The growth targets that we have so yeah. Thanks. Thanks for the question, Yes, we believe our footprint primarily with our cultivation. Inca currently is sufficient to meet our needs a lot of the focus and investment that we're making is really to improve our yield and the quality of our flower coming out of that facility.

Good morning, Thank you put a question.

As I mentioned, we're doing smart investment to really unlock yield and quality of the flowered at world growing in our own facility.

Facilities.

We've looked at this large and why we're confident with limited investment.

We wouldn't expect a significant amount of additional capital investment needed to meet the demand. So I think it's again, it's executing with it with the assets that we have an improving utilization across the board.

But that we can meet the demand.

Meet the growth targets that we have so yes. Thanks. Thanks for the question Fred Yes, we believe our footprint, primarily with our cultivation and concurrently is sufficient to meet our needs a lot of the focus and investment that we're making is really to improve our yield and the quality of our flower coming out of that facility, but we.

Thank you and then I guess the second question just on the I guess related to that balance sheet.

Our cash position.

So obviously, you'll have access to capital and are in good position here, but I guess, if you could talk about the capital location priorities that you have now that you have no significant limitations to that thanks.

We wouldn't expect a significant amount of additional capital investment needed to meet the demand. So I think it's again, it's executing with the assets that we have an improving utilization across the board.

Yeah. So for my view fried items of 300 million of cash with no near term debt obligations.

Thank you and then just a second question just on the I guess related to that balance sheet.

It really provides further optionality for us when it comes to evaluating our capital structure and evaluating potential investment opportunities to grow and strengthen our business.

Our cash position.

You, obviously have access to capital in a good position here, but I guess, if you could talk about the capital location priorities that you have now that you have no significantly we can instead of that thanks.

The cash also provides us with flexibility to capitalize on on these potential opportunities, but also mitigate risks as market conditions fluctuate as we all know it's cannabis is a highly volatile space.

Yes, so from my view fried items of 300 million of cash with no near term debt obligations.

So I think for right now we were evaluating potential.

It really provides further optionality for us when it comes to evaluating our capital structure and evaluating potential investment opportunities to grow and strengthen our business.

Accretive options that are out there, but ultimately we want to make sure we remain resilient and stabilize the company and focus on the business that we have today.

Thank you. The next question comes from Carlos <unk> Associates. Please go ahead.

The cash also provides us with flexibility to capitalize on on these potential opportunities, but also mitigate risks as market conditions fluctuate as we all know it's cannabis is a highly volatile space.

Thank you and good morning, everyone.

Two questions upfront.

One on the Vape launch I mean, obviously the big labels launching Blue rules has been very successful can you give more color loading dose of the vape launch easyjet.

So I think for right now we were evaluating potential.

Accretive options that are out there, but ultimately we want to make sure we remain resilient and stabilize the company and focus on the business that we have today.

All in ones, but you're also planning and <unk> are we talking all in loans just in these days. It also late within Washington.

Thank you. The next question comes from Pablo <unk> Associates. Please go ahead.

I think we buy them loans. If you can just give more color on sort of you think about the category, especially in the room for innovation.

Thank you and good morning, everyone.

I will ask my two questions upfront.

One on the Vape launch I mean, obviously the big labels launching three rules has been very successful can you give more co loading dose. So the vape launch you suggest.

So the price competition, there theres been into a race to the bottom it seems.

All the ones that seem disobeyed in terms of my second question is more in terms of.

In the all in ones that are you also planning and <unk> are we talking only ones just in distillates and also late where soon or late Wilson.

The U S business I know that you said look the U S is more of a long term opportunity and I understand that.

But it would help if you can give us.

Daimon, Steve you can just give more color on how you think about the category, especially in terms of the room for innovation and also the price competition. There there's been a bit of a race to the bottom it seems on a all in ones does industrial Gabe in terms of my second question is more in terms of.

Update in terms of where things done we'd kind of be USA.

Especially in terms of any hill, you had to give to eight reach in terms of our balance sheet or guarantees I think Dupont.

The company bought data from AAC Gama I don't know what happened recently in the June quarter or September quarter, industrial the <unk> acreage operate especially from a balance sheet perspective. Thank you.

The U S business I know you said look the U S is more of a long term opportunity and I understand that.

But it would help if you can give us an.

An update in terms of where things done we've done will be USA.

Hey, good morning, Okay, well, let's start with the Vapes and Tom will jump in for a for the U S. So we're thrilled with the.

Especially in terms of any help you had to give to acreage in terms of our balance sheet or guarantees I think into bonds.

The early results we're getting.

The company both dead from AFC Gama I don't know what happened recently in the June quarter or September quarter, industrial Bob killed the acreage operate especially from a balance sheet and casual perspective. Thank you.

With <unk> were all at once so as I mentioned, we launched Tweed Southern acres, we did really well, we actually have run out of stock. So we have to to accelerate replenish metal first wave.

Hey, good morning, Okay doing well, let's start with the base and Tom will jump in for a for the U S. So we're trails with the.

I imagine we're launching.

We're about to launch.

<unk> an all in one.

<unk> is a first for century.

The early results we're getting.

We're we're very encouraged by the gross margins that we're able to achieve.

With all were all at once so as I imagined, we launched Tweed Southern acres, we did really well, we actually have run out of stock. So we have to to accelerate replenish metal first wave.

With these.

With these products, so we're putting out their product of superior quality. So we're pricing.

Appropriately.

I imagine we're launching.

<unk> bid, David Mark margin accretive.

We're about to launch.

<unk> an all in one.

So as it comes to the full spectrum of live arrays and saw this deliberate liquid diamonds in Alberta.

<unk> is a first first that tree.

We're we're very encouraged by the gross margins that we're able to achieve.

There is more development to.

That will that will come there we're committed to being a leader.

With these.

With these products, so we're putting out their product of superior quality, so where pricing data.

And all in one day. So it is a key market key growing.

Key growing markets, so more news to come there and make sure to try the.

Appropriate fleet and they've been they've been bulk margin accretive.

Then you then you Claiborne OLED wants us.

So as it comes to the full spectrum of live arrays and saw a distillate that's liquid diamonds and everything there is more developments to that will that will come there with <unk>.

As they called out that was able to sample that this weekend.

Yeah.

It's what we stand for a superior elevated.

<unk> says with quality products that does deliver.

<unk> to being a leader.

All in one day. So it is a key market key growing Q.

All of that Tom do you want to give some insights about the U S. Yes sure. So somehow there are a couple of points within your question. There. So there are no guarantees between canopy growth and canopy USA. So canopy USA is an independently run and managed.

Key growing markets, so more news to come there and make sure to try it.

That you that you Claiborne OLED wants us.

As they called out that was able to sample that this weekend.

Bryce they did have new financing over the summer from a.

So it's what we stand for a superior elevated experiences with quality products. It does deliver.

From their lender and the team has been working diligently to deploy that capital in the areas, where they see the highest return.

Although Tom you want to give some insights about the U S. Yes, sure. So so Pablo a couple points within your question. There. So there are no guarantees between canopy growth and canopy USA. So canopy USA is an independently run and managed.

Overall their focus now is on execution and really bringing the three companies together and executing well in the U S space, but to be clear there is no funding, new or otherwise with canopy, USA and Canada growth.

Enterprise they did have new financing over the summer from a from.

This concludes canopy growth's second quarter fiscal 2026 financial results conference call.

From their lender and the team has been working diligently to deploy that capital in the areas, where they see the highest return.

A replay of this conference call will be available until February five 2026 and can be accessed following the instructions provided in the company's press release issued earlier today.

Overall their focus now is on execution and really bringing the three companies together and executing well in the U S space, but to be clear there is no funding newer otherwise with canopy USA and canopy growth.

Kennedy quotes Investor relations team will be available to answer additional questions.

For attending today's call.

This concludes canopy growth's second quarter fiscal 2026 financial results conference call.

A replay of this conference call will be available until February five 2026 and can be accessed following the instructions provided in the company's press release issued earlier today.

Canopy closes investor relations team will be available to answer additional questions. Thank you for attending today's call.

[noise].

Yeah.