Q1 2027 Canopy Growth Corp Earnings Call

August 7, 2026

Speaker #1: Good morning. My name is Joanna, and I will be your conference operator today. I would like to welcome you to Kennedy Grove's first-quarter fiscal 2027 financial results conference call.

Operator: Good morning. My name is Joanna, and I will be your conference operator today. I would like to welcome you to Canopy Growth's Q1 fiscal 2027 financial results conference call. Currently, all participants are in a listen-only mode. I will now turn the call over to John Vincic in investor relations. John, you may begin the conference call.

Speaker #1: Currently, all participants are in a listen-only mode. I will now turn the call over to John Vincic, investor relations. John, you may begin the conference call.

Speaker #2: thank you, operator, and good morning. And thank you to everyone for joining us. On our call today, we have Kennedy Grove's Chief Executive Officer, Luc Mangeaux, and Chief Financial Officer, Tom Stewart.

John Vincic: Thank you, operator. Good morning, and thank you to everyone for joining us. On our call today, we have Canopy Growth's Chief Executive Officer, Luc Mongeau, and Chief Financial Officer, Tom Stewart. Prior to the opening of financial markets today, Canopy Growth issued a news release announcing the financial results for its Q1 ended 30 June 2026. The news release and financial statements have been filed on EDGAR and SEDAR and will be available on the website under the Investors tab. 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.

John Vincic: Thank you, operator. Good morning, and thank you to everyone for joining us. On our call today, we have Canopy Growth's Chief Executive Officer, Luc Mongeau, and Chief Financial Officer, Tom Stewart. Prior to the opening of financial markets today, Canopy Growth issued a news release announcing the financial results for its Q1 ended June 30, 2026. The news release and financial statements have been filed on EDGAR and SEDAR and will be available on the website under the Investors tab. 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.

Operator: Good morning. My name is Joanna, and I will be your conference operator today. I would like to welcome you to Canopy Growth's Q1 Fiscal 2027 Financial Results Conference Call. Currently, all participants are in a listen-only mode. I will now turn the call over to John Vincic in investor relations. John, you may begin the conference call.

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 first quarter fiscal 2027 financial results conference call.

Speaker #2: Prior to the opening of financial markets today, Kennedy Grove issued a news release announcing the financial results for its first quarter ended June 30, 2026.

Speaker #1: Currently, all participants are in a listen-only mode. I will now turn the call over to John Vincic, Investor Relations. John, you may begin the conference call.

Speaker #2: The news release and financial statements have been filed on Edgar and Cedar, and will be available on the website under the investors tab. 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.

John Vincic: Thank you, operator, and good morning, and thank you to everyone for joining us. On our call today, we have Canopy Growth's Chief Executive Officer, Luc Mongeau, and Chief Financial Officer, Tom Stewart. Prior to the opening of financial markets today, Canopy Growth issued a news release announcing the financial results for its Q1 end of 30 June 2026. The news release and financial statements have been filed on EDGAR and SEDAR and will be available on the website under the Investors tab. 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: Thank you, operator, and good morning. And thank you to everyone for joining us. On our call today, we have Canopy Growth's Chief Executive Officer, Luc Mongeau, and Chief Financial Officer, Tom Stewart.

Speaker #2: Prior to the opening of financial markets today, Canopy Growth issued a news release announcing the financial results for its first quarter ended June 30, 2026.

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

John Vincic: Please review today's earnings release and Canopy's 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. Please note that all financial information is provided in CAD unless otherwise stated. Following the remarks by Luc and Tom, we will conduct a question-and-answer session where we will take questions from analysts. With that, I would like to turn the call over to Luc.

Speaker #2: The news release and financial statements have been filed on Edgar and Cedar, and will be available on the website under the Investors tab. 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: 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 penny and dollars unless otherwise stated.

Speaker #2: Following the remarks by Luc and Tom, we will conduct a question-and-answer session where we will take questions from analysts. And with that, I would like to turn the call over to Luc.

John Vincic: Please review today's earnings release and Canopy's 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. Please note that all financial information is provided in penny and dollars unless otherwise stated. Following the remarks by Luc and Tom, we will conduct a question and answer session where we will take questions from analysts. With that, I would like to turn the call over to Luc.

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

Speaker #3: Thank you. Good morning, everyone. And thank you for joining us today. Fiscal 2027 is up to a strong start. In its build on real momentum from fiscal 2026, I'm confident to say that our first-quarter results are thus well-positioned to build on that momentum all year long.

Luc Mongeau: Thank you. Good morning, everyone, and thank you for joining us today. Fiscal 2027 is off to a strong start, and it is built on real momentum from fiscal 2026. I am confident to say that our Q1 results have us well-positioned to build on that momentum all year long. Fiscal 2026 was all about sharpening our focus, tightening execution, and positioning us for growth, including the strategic acquisition of MTL Cannabis. That work is truly paying off. Since I joined as Canopy's CEO in January of 2025, this is the first quarter we have reported year-over-year growth in every single business. Fiscal 2027 is about growth and moving our focus to cultivation to improve yields and accelerate growth, especially in Europe. It is as well about increasing our manufacturing efforts to improve margin and accelerate our journey to positive adjusted EBITDA.

Speaker #3: Fiscal 2026 was all about sharpening our focus: tightening execution, and positioning us for growth, including the strategic acquisition of MTL Cannabis. That work is truly paying off.

Luc Mongeau: Thank you. Good morning, everyone, and thank you for joining us today. Fiscal 2027 is off to a strong start, and it's built on real momentum from fiscal 2026. I'm confident to say that our Q1 results have us well-positioned to build on that momentum all year long. Fiscal 2026 was all about sharpening our focus, tightening execution, and positioning us for growth, including the strategic acquisition of MTL Cannabis. That work is truly paying off. Since I joined as Canopy CEO in January of 2025, this is the Q1 we've reported year-over-year growth in every single business. Fiscal 2027 is about growth and moving our focus to cultivation to improve yields and accelerate growth, especially in Europe. It's as well about increasing our manufacturing efforts to improve margin and accelerate our journey to positive adjusted EBITDA.

Speaker #3: Thank you. Good morning, everyone. And thank you for joining us today. Fiscal 2027 is up to a strong start. In its build on real momentum from fiscal 2026, I'm confident to say that our first quarter results are thus well-positioned to build on that momentum all year long.

Speaker #3: Since I joined, as Kennedy's CEO in January of 2025, this is the first quarter we've reported year-over-year growth in every single business. Fiscal 2027 is about growth, and moving our focus to cultivation, to improve yields, and accelerate growth, especially in Europe, and it's as well about increasing our manufacturing efforts to improve margin and accelerate our journey to positive adjusted EBITDA.

Speaker #3: Fiscal 2026 was all about sharpening our focus and tightening execution and positioning us for growth, including the strategic acquisition of MTL Cannabis. That work is truly paying off.

Speaker #3: Since I joined, as Canopy's CEO in January of 2025, this is the first quarter we've reported year-over-year growth in every single business. Fiscal 2027 is about growth and moving our focus to cultivation, to improve yields, and accelerate growth, especially in Europe.

Speaker #3: In the quarter, net revenue was $81.2 million, an increase of 13% from Q1 of last year, with our cannabis segment growing at 14% and stores and BICO growing at 6%.

Luc Mongeau: In the quarter, net revenue was CAD 81.2 million, an increase of 13% from Q1 of last year, with our Cannabis segment growing at 14% and Storz & Bickel growing at 6%. Importantly, adjusted gross margin was up 600 basis points over last year, reflecting the effort we have made across our supply chain to reduce our cost structure and improve execution. This gives us confidence our strategy is working. Our cannabis growth was led by our Canadian medical business, which reported net revenue of CAD 25.8 million, up 22% from Q1 2026. Strong year-over-year growth in medical was driven by a steady increase in patient count over the past year. Our medical business was recently strengthened by the addition of MTL Cannabis with its Canada House Clinics and Outbound Medics online distribution platform.

Speaker #3: An importantly, adjusted gross margin was up 600 basis points over last year, reflecting the effort we've made across our supply chain to reduce our cost structure and improve execution.

Speaker #3: And it's as well about increasing our manufacturing efforts to improve margin and accelerate our journey to positive adjusted EBITDA. In the quarter, net revenue was $81.2 million, an increase of 13% from Q1 of last year, while our cannabis segment growing at 14% and stores and BICO growing at 6%.

Luc Mongeau: In the quarter, net revenue was CAD 81.2 million, an increase of 13% from Q1 of last year, with our cannabis segment growing at 14% and Storz & Bickel growing at 6%. Importantly, adjusted gross margin was up 600 basis points over last year, reflecting the effort we've made across our supply chain to reduce our cost structure and improve execution. This gives us confidence our strategy is working. Our cannabis growth was led by our Canadian medical business, which reported net revenue of CAD 25.8 million, up 22% from Q1 2026. Strong year-over-year growth in medical was driven by a steady increase in patient count over the past year. Our medical business was recently strengthened by the addition of MTL Cannabis with its Canada House clinics and Abba Medix online distribution platform.

Speaker #3: This gives us confidence our strategy is working, while cannabis growth was about medical business. It reported net revenue of $28.25.8 million, up 22% from Q1 2026.

Speaker #3: And importantly, adjusted gross margin was up 600 basis points over last year, reflecting the effort we've made across our supply chain to reduce our cost structure and improve execution.

Speaker #3: Strong year-over-year growth in medical was driven by a steady increase in patient count over the past year, our medical business was re-recently strengthened by the addition of MTL Cannabis with its Canada Isles clinics and ABA Medic's online distribution platform.

Speaker #3: This gives us confidence our strategy is working. Our cannabis growth was led by our Canadian medical business, which reported net revenue of $28.25 million, up 22% from Q1 2026.

Speaker #3: As a combined company, we continue to add patients and increase the number of orders we fill during the first quarter, helping to cement our position as the number-one Canadian medical cannabis provider.

Luc Mongeau: As a combined company, we continued to add patients and increase the number of orders we filled during the first quarter, helping to cement our position as the number one Canadian medical cannabis provider. Our Apollo Cannabis Clinics were recently voted Best Medical Cannabis Clinic in the Toronto Star Readers' Choice Awards. This recognition reflects our commitment to positive patient outcomes and to making medical cannabis care accessible. We are trusted by patients and will strive to continue to earn that trust. Even with these successes, given our significant focus on veteran care, we have felt the impact of the reduced reimbursement rates for our products from Veterans Affairs Canada. We have done our utmost mitigating the impacts of these changes on our patients and veterans and continue to work to broaden our patient base to build on our leadership position.

Speaker #3: Strong year-over-year growth in medical was driven by a steady increase in patient count over the past year, our medical business was recently strengthened by the addition of MTL Cannabis with its Canada Isles clinics and ABBA Medics online distribution platform.

Speaker #3: Our Apollo Cannabis clinics were recently voted best medical cannabis clinic in the Toronto Star Reader's Choice Awards. This recognition reflects our commitment to positive patient outcomes and to making medical cannabis care accessible, where our trusted by patients and will strive to continue to earn that trust.

Luc Mongeau: As a combined company, we continued to add patients and increase the number of orders we filled during Q1, helping to cement our position as the number 1 Canadian medical cannabis provider. Our Apollo Cannabis Clinics were recently voted Best Medical Cannabis Clinic in the Toronto Star Readers' Choice Award. This recognition reflects our commitment to positive patient outcomes and to making medical cannabis care accessible. We are trusted by patients and will strive to continue to earn that trust. Even with these successes, given our significant focus on veteran care, we have felt the impact of the reduced reimbursement rates for our products from Veterans Affairs Canada. We have done our utmost mitigating the impacts of these changes on our patients and veterans and continue to work to broaden our patient base to build on our leadership position.

Speaker #3: As a combined company, we continue to add patients and increase the number of orders we fill during the first quarter, helping to cement our position as the number one Canadian medical cannabis provider.

Speaker #3: Even with these successes, given our significant focus on veteran care, we have felt the impact of the reduced reimbursement rates for our products on veteran affairs Canada.

Speaker #3: We have done our utmost mitigating the impacts of these changes on our patients and veterans, and continue to work to broaden our patient base to build on our leadership position.

Speaker #3: Despite this headwind, we remain strongly committed to our medical patients in Canada. We continue to offer the best product assortment, consistent availability, and the best-in-class service experience for veterans and all patients alike.

Speaker #3: Even with these successes, given our significant focus on bettering care, we have felt the impact of the reduced reimbursement rates for our products on veteran affairs Canada.

Luc Mongeau: Despite this headwind, we remain strongly committed to our medical patients in Canada. We continue to offer the best product assortment, consistent availability, and a best-in-class service experience for veterans and all patients alike. We strongly believe staying true to our core values will enable us to continue to add new patients and ensure the ongoing expansion of the business. Our Canadian adult-use net revenue of CAD 29.7 million was up 10% from Q1 of last year, building on the impressive 20% growth rate we delivered in fiscal 2026. Our recreational business has benefited from ongoing strengthening of our product portfolio, including the addition of the popular MTL Cannabis brand. We plan to leverage Canopy's distribution capabilities to further expand the reach of the MTL brands across the country. The most recent market share data shows that Canopy is now ranked at number six overall, up from number eight.

Speaker #3: We have done our utmost mitigating the impacts of these changes on our patients and veterans, and continue to work to broaden our patient base to build on our leadership position.

Speaker #3: We strongly believe staying true to our core values will enable us to continue to add new patients and ensure the ongoing expansion of the business.

Luc Mongeau: Despite this headwind, we remain strongly committed to our medical patients in Canada. We continue to offer the best product assortment, consistent availability, and a best-in-class service experience for veterans and all patients alike. We strongly believe staying true to our core values will enable us to continue to add new patients and ensure the ongoing expansion of the business. Our Canadian adult use net revenue of CAD 29.7 million was up 10% from Q1 of last year, building on the impressive 20% growth rate we delivered in fiscal 2026. Our recreational business has benefited from ongoing strengthening of our product portfolio, including the addition of the popular MTL Cannabis brand. We plan to leverage Canopy's distribution capabilities to further expand the reach of the MTL Cannabis brands across the country. The most recent market share data shows that Canopy is now ranked at number 6 overall, up from number 8.

Speaker #3: Despite this headwind, we remain strongly committed to our medical patients in Canada. We continue to offer the best product assortment, consistent availability, and a best-in-class service experience for veterans and all patients alike.

Speaker #3: Our Canadian adult use net revenue of $29.7 million was up 10% from Q1 of last year, building on the impressive 20% growth rate we delivered in fiscal 2026.

Speaker #3: Our recreational business has benefited from ongoing strengthening of our product portfolio including the addition of the popular MTL Cannabis brand. We plan to leverage Kennedy's distribution capabilities to further expand the reach of the MTL brands across the country.

Speaker #3: We strongly believe staying true to our core values will enable us to continue to add new patients and ensure the ongoing expansion of the business.

Speaker #3: Our Canadian adult-use net revenue of $29.7 million was up 10% from Q1 of last year, building on the impressive 20% growth rate we delivered in fiscal 2026.

Speaker #3: The most recent market share data shows that Kennedy is now ranked at number 6 overall, up from number 8. We also moved into the top 2 position in premium flour and infused pre-rolls, and number 1 is Sub Jazz.

Speaker #3: Our recreational business has benefited from ongoing strengthening of our product portfolio including the addition of Cannabis brand. We plan to leverage Canopy's distribution capabilities to further expand the reach of the MTL brands across the country.

Luc Mongeau: We also moved into the top two position in premium flower and infused pre-rolls, and number one in soft gels. We are confident this growth will continue given the progress we are making in cultivation and the additional flower we plan to bring to market, as well as planned innovation around the Claybourne and Tweed brands. In international cannabis, net revenue rose 10% year over year as we reset our operations and continue to lay out the end-to-end supply chain to grow in the European market. Europe remains a major catalyst for our growth, driven by particularly robust sales performance in Poland during Q1, where we are now a top-three supplier. This was our third consecutive quarter of sequential growth in international, driven by solid execution, in particular, our ability to consistently supply high-quality flower.

Speaker #3: We are confident this growth will continue if the other progress we are making in cultivation and the additional flour we plan to bring to market, as one as well as plan innovation around the Claybourne and Tweed brands.

Speaker #3: The most recent market share data shows that Canopy is now ranked at number 6 overall, up from number 8. We also moved into the top two positions in premium flower and infused pre-rolls, and number one is Sub Jazz.

Speaker #3: An international cannabis net revenue rose 10% year over year as we reset our operations and continue to lay out the end-to-end supply chain to grow in the European market.

Luc Mongeau: We also moved into the top 2 position in premium flower and infused pre-rolls, and number 1 in softgels. We are confident this growth will continue due to progress we are making in cultivation and the additional flower we plan to bring to market, as well as planned innovation around the Claybourne and Tweed brands. In international cannabis, net revenue rose 10% year-over-year as we reset our operations and continue to lay out the end-to-end supply chain to grow in the European market. Europe remains a major catalyst for our growth, driven by particularly robust sales performance in Poland during Q1, where we are now a top 3 supplier. This was our third consecutive quarter of sequential growth in international, driven by solid execution, in particular, our ability to consistently supply high-quality flower. We also plan to begin shipments of-

Speaker #3: We are confident this growth will continue if the other progress we are making in cultivation and the additional flower we plan to bring to market, as well as plan innovation around the Claybourne and Tweed brands.

Speaker #3: Europe remains a major catalyst for our growth, driven by particularly robust sales performance in Poland during Q1, where we are now at the top 3 suppliers.

Speaker #3: This was our first consecutive quarter of sequential growth in international, driven by solid execution in particular our ability to consistently supply high-quality flour. We also plan to begin shipment of flour to the UK imminently.

Speaker #3: An international cannabis net revenue rose 10% year over year as we reset our operations and continue to lay out the end-to-end supply chain to grow in the European market.

Speaker #3: Europe remains a major catalyst for our growth, driven by particularly robust sales performance in Poland during Q1, where we are now a top-three supplier.

Luc Mongeau: We also plan to begin shipment of flower to the UK imminently, with revenue contributions expected to start in the H2 of the fiscal year. We are energized by the tremendous opportunities in Europe and by our strengthening ability to supply the market with quality products that meet the growing needs of European cannabis patients. Storz & Bickel returned to year-over-year growth in Q1, reporting a 6% net revenue increase to CAD 16.1 million, as well as a very strong gross margin of 48% compared to 29% in Q1 of 2026. Q1 was Storz & Bickel's first full quarter under the new leadership team, which has been implementing a focused go-to-market strategy.

Speaker #3: With revenue contributions expected to start in the second half of the fiscal year. We're energized by the tremendous opportunities in Europe and by our strengthening of strengthening ability to supply the market with quality products that meet growing needs of European cannabis patients.

Speaker #3: Stores and BICO returned to year-over-year growth in Q1, reporting a 6% net revenue increase to $16.1 million, as well as a very strong gross margin of 48% compared to 29% in Q1 of 2026.

Speaker #3: Q1 was stores and BICO's first full quarter under the new leadership team which has been implementing a focused go-to-market strategy. We're pleased to see increased sales and market outside the traditional strongholds of the US and Germany, clearly demonstrating that stores and BICO is diversifying its revenue stream and building on its position as the number-one global provider of medical vaporizers.

Luc Mongeau: We are pleased to see increased sales in markets outside the traditional strongholds of the US and Germany, clearly demonstrating that Storz & Bickel is diversifying its revenue stream and building on its position as the number 1 global provider of medical vaporizers. While these results are encouraging, our strategy remains anchored on building upon our capabilities in three key areas: world-class cultivation, optimizing our supply chain network, and fueling international supply. Elevating our cultivation capabilities is now a company-wide priority. It has contributed to our recent success and, more importantly, establishes a foundation for accelerated long-term growth. The addition of the MTL Cannabis team kicked off a sharing of best practices and expertise across the organization. We are implementing a wide range of improvements, ranging from growing techniques to lighting upgrades and environmental controls. The early results are positive, with promising improvements to yield, THC levels, and cost per gram.

Speaker #3: While these results are encouraging, our strategy remains anchored on building upon our capabilities in 3 key areas: world-class cultivation, optimizing our supply chain network, and fueling international supply.

Speaker #3: Elevating our cultivation capabilities is now a company-wide priority, and has contributed to our recent success in more importantly, establishing a foundation for accelerated long-term growth.

Speaker #3: The addition of the MTL Cannabis team to our sharing of best practices and expertise across the organization, we're implementing a wide range of improvements ranging from growing techniques to lighting upgrades and environmental controls.

Speaker #3: Early results are positive, with promising improvements to yield, THC levels, and cost progress. We have begun growing popular MTL strain at Kincarden, on duty leadership of the MTL Master Growers, as well as cultivating new strains to enhance our genetic portfolio.

Luc Mongeau: We have begun growing popular MTL strain at Kincardine under the leadership of the MTL master growers, as well as cultivating new strains to enhance our genetic portfolio. These initiatives promise to increase our supply of high-quality flower. Our business has already benefited from more consistent supply, and I am excited to say there is significant room for further gains. As throughput increases throughout the year, we expect to see a direct positive impact on revenue. Post quarter end, we kicked off a comprehensive end-to-end supply chain initiative to streamline our processes, right-size our distribution footprint, and optimize labor. As we grow revenue, we are targeting significant improvements in gross margin beyond what we have already seen. Turning to international supply, Canopy has a complete EU GMP flower supply chain, starting with our EU GMP certified Kincardine facility and extending to our distribution facility in Germany.

Speaker #3: These initiatives promise to increase our supply of high-quality flour, our business has already benefited from more consistent supply, and I'm excited to see there is significant room significant room for further gains.

Speaker #3: As throughput increases, throughout the year, we expect to see a direct positive impact on revenue. Post-quarter end, we kicked off a comprehensive end-to-end supply chain initiative to streamline our processes, right-size our distribution footprint, and optimize labor.

Speaker #3: As we grew revenue, we're targeting significant improvements in growth margin beyond what we have already seen. Turning to international supply, Kennedy has a complete EU GMP flour supply chain starting with our EU GMP certified Kincarden facility and extending to our distribution facility in Germany.

Speaker #3: We have also already completed our EU GMP inspection for finished products and cannabis 2.0 products manufacturing in our Smithswald facility, for which we expect to receive certification during this fiscal year.

Luc Mongeau: We have also already completed our EU GMP inspection for finished products and Cannabis 2.0 products manufacturing in our Smiths Falls facility, on which we expect to receive certification during this fiscal year. That certification will make Canopy one of the only domestic companies with end-to-end EU GMP cultivation, manufacturing, and finished product processing and packaging of products intended for the international market. This capability will be a core differentiator for Canopy, and we see it as a competitive edge that can spur its growth. As yields and manufacture capacity increase throughout the year, we expect to see improved gross margin, and we will be better positioned to compete and win in the competitive Canadian medical and recreational space, as well as winning in global markets. This is what truly excites me most about the future of our company.

Speaker #3: That certification will make Kennedy one of the only domestic companies with end-to-end EP EU GMP cultivation manufacturing and finished product processing and packaging of products intended for the international market.

Speaker #3: This capability will be a core differentiator for Kennedy and we see it as a competitive edge that can spare it growth. As yields and manufacturing capacity increase throughout the year, we expect to see improved gross margin and we will be better positioned to compete and win in the competitive Canadian medical and recreational space, as well as winning in global markets.

Speaker #3: This is what truly excites me most about the future of our company. I will now ask Tom to provide more details on our first quarter financial results.

Luc Mongeau: I will now ask Tom to provide more details on our Q1 financial results.

Speaker #2: Thank you, Luke, and good morning everyone. Kennedy reported a solid first quarter, showing good progress on both the top line and key profitability measures.

Tom Stewart: Thank you, Luc, and good morning, everyone. Canopy reported a solid Q1, showing good progress on both the top line and key profitability measures. We reported CAD 81.2 million of net revenue in Q1 fiscal 2027, up 13% from the same period last year. Net revenue increased in our Cannabis segment with growth across all channels, as well as in the Storz & Bickel segment. Despite the Veterans Affairs reimbursement changes, Canada Medical Cannabis reported strong growth, with net revenue increasing 22% year-over-year to CAD 25.8 million. We are also taking steps to further mitigate the impact of the Veterans Affairs changes on margins and EBITDA.

Speaker #2: We reported 81.2 million of net revenue in Q1, fiscal 2027, up 13% from the same period last year. Net revenue increased in our cannabis segment with growth across all channels as well as in the stores and BICO segment.

Speaker #2: Despite the veteran affairs reimbursement changes, Canada Medical Cannabis reported strong growth with net revenue increasing 22% year-over-year to 25.8 million. We are also taking steps to further mitigate the impact of the veteran affairs changes on margins and EBITDA.

Speaker #2: These include saving costs by integrating functions like customer care with the MTL organization, renegotiating pricing with third-party suppliers and partners to share the impact, and adding more large pack formats which deliver greater value to patients via them to buy more product upfront while reducing costs for the company.

Tom Stewart: These include saving costs by integrating functions like customer care with the MTL organization, renegotiating pricing with third-party suppliers and partners to share the impact, and adding more large product formats, which deliver greater value to patients by allowing them to buy more product upfront while reducing costs for the company. We have consistently demonstrated our ability to grow patients and gain traction in Canada Medical despite broader market pressures. As we navigate the impact of the Veterans Affairs reimbursement changes, we remain focused on executing the same proven strategy that has driven our success to date: growing our patient base, increasing engagement with our patients, and operating the business to deliver a best-in-class customer service experience. Overall, our Q1 results are on track with the commentary we provided on our most recent investor call in June.

Speaker #2: We have consistently demonstrated our ability to grow patients and gain traction in Canada Medical despite broader market pressures. As we navigate the impact of the veteran affairs reimbursement changes, we remain focused on executing the same proven strategy that has driven our success today.

Speaker #2: Growing our patient base, increasing engagement with our patients, and operating the business to deliver our best-in-class customer service experience. Overall, our Q1 results are on track with the commentary we provided on our most recent investor call in June.

Speaker #2: At that time, we said we expect to report year-over-year revenue growth throughout fiscal 2027. We also described a transition period in the first half of the year as we integrate the MTL Cannabis operations and focus on our key priorities.

Tom Stewart: At that time, we said we expect to report year-over-year revenue growth throughout fiscal 2027. We also described a transition period in the H1 of the year as we integrate the MTL Cannabis operations and focus on our key priorities. On that basis, we continue to expect to report consistent improvement in our operations throughout the fiscal year. Consolidated gross margin was 31% in Q1 2027 on an adjusted basis, up from 25% a year ago and outpacing our full-year adjusted gross margin performance in fiscal 2026. We delivered an adjusted gross margin of 26% in the Cannabis segment in Q1 2027, demonstrating meaningful year-over-year margin expansion and continued progress against our profitability objectives. Reported gross margin was 22%, reflecting a CAD 2.6 million non-cash inventory flow-through charge associated with the MTL acquisition.

Speaker #2: On that basis, we continue to expect to report consistent improvement in our operations throughout the fiscal year. Consolidated gross margin was 31% in Q1 2027 on an adjusted basis, up from 25% a year ago, and outpacing our full year adjusted gross margin performance in fiscal 2026.

Speaker #2: We delivered adjusted gross margin of 26% in the cannabis segment in Q1 2027, demonstrating meaningful year-over-year margin expansion and continued progress against our profitability objectives.

Speaker #2: Reported gross margin was 22%, reflecting a 2.6 million dollar non-cash inventory flow-through charge associated with the MTL acquisition. We expect cannabis margins to continue strengthening as we capture the benefits of the MTL integration and execute on our key priorities.

Tom Stewart: We expect cannabis margins to continue strengthening as we capture the benefits of the MTL integration and execute on our key priorities. Increased production from our existing cultivation facilities, combined with ongoing efficiency gains, should further reduce our cost per unit and support meaningful margin expansion over time. Storz & Bickel delivered an exceptional gross margin of 48% in Q1, up from 29% a year ago, demonstrating the significant progress the business has made in improving profitability. The improvement was driven primarily by operational and cost efficiency initiatives executed over the past year, with an additional benefit from tariff refunds recognized during the quarter. Even excluding the tariff impact, margins were substantially ahead of the prior year. This performance demonstrates the success of the new Storz & Bickel leadership team in optimizing their business. We would expect to see continued improvements across the remainder of fiscal 2027.

Speaker #2: Increased production from our existing cultivation facilities, combined with ongoing efficiency gains, should further reduce our cost per unit and support meaningful margin expansion over time.

Speaker #2: Stores and BICO delivered an exceptional gross margin of 48% in Q1, up from 29% a year ago, demonstrating the significant progress the business has made in improving profitability.

Speaker #2: The improvement was driven primarily by operational and cost efficiency initiatives executed over the past year, with an additional benefit from tariff refunds recognized during the quarter.

Speaker #2: Even excluding the tariff impact, margins were substantially ahead of the prior year. This performance demonstrates the success of the new stores and BICO leadership team in optimizing their business.

Speaker #2: We would expect to see continued improvements across the remainder of fiscal 2027. Turning to operating expenses, SG&A increased by 2.1 million as compared to Q1 fiscal 2026, despite operating a significantly larger business following the MTL acquisition.

Tom Stewart: Turning to operating expenses. SG&A increased by CAD 2.1 million as compared to Q1 fiscal 2026, despite operating a significantly larger business following the MTL acquisition. Absorbing those operations while keeping costs tightly controlled is a direct result of our ongoing cost reduction efforts and the immediate synergies we are capturing from the MTL integration. As a reminder, our stated target is to reach a run rate of CAD 10 million of synergies within 18 months of the March closing of the MTL transaction. We are now actively executing against CAD 8 million of those synergies, up from the CAD 6 million we reported last quarter. On that basis, we believe there is upside potential to our initial target, both in terms of timing as well as in the total dollar amount.

Speaker #2: Absorbing those operations while keeping costs tightly controlled is a direct result of our ongoing cost reduction efforts and the immediate synergies we are capturing from the MTL integration.

Speaker #2: As a reminder, our stated target is to reach a run rate of 10 million dollars of synergies within 18 months of the March closing of the MTL transaction.

Speaker #2: We are now actively executing against 8 million of those synergies, up from the 6 million we reported last quarter. On that basis, we believe there is upside potential to our initial target, both in terms of timing as well as in the total dollar amount.

Speaker #2: Improved margins and discipline on OPEX led to an adjusted EBITDA loss of 3.2 million in Q1 2027, representing a 59% improvement from the prior year.

Tom Stewart: Improved margins and discipline on OpEx led to an adjusted EBITDA loss of CAD 3.2 million in Q1 2027, representing a 59% improvement from the prior year. With the additional revenue growth opportunities Luc described and further integration efficiencies still to be realized, we remain on track to report positive adjusted EBITDA during fiscal 2027. Turning to our financial position. We had CAD 337 million of cash at 30 June 2026. I will note that the CAD 25 million of cash used in operating activities in the first quarter is higher than the run rate we expect to see over the course of fiscal 2027, as the increase in working capital is expected to balance out during the remainder of the year, and we would expect one-time transaction and restructuring costs to decline throughout the year. We remain confident in the strength of our balance sheet following the recapitalization completed during fiscal 2026.

Speaker #2: With the additional revenue growth opportunities Luke described and further integration efficiencies still to be realized, we remain on track to report positive adjusted EBITDA during fiscal 2027.

Speaker #2: Turning to our financial position, we had 337 million of cash at June 30th, 2026. I will note that the 25 million of cash used in operating activities in the first quarter is higher than the run rate we expect to see over the course of fiscal 2027, as an increase in working capital is expected to balance out during the remainder of the year.

Speaker #2: And we would expect one-time transaction and restructuring costs to decline throughout the year. We remain confident in the strength of our balance sheet following the recapitalization completed during fiscal 2026.

Speaker #2: Our strong cash position underpins our financial capacity to support strategic growth opportunities that may arise. Before handing the call back to Luke, I will remind shareholders we are holding our annual general and special meeting on September 25th.

Tom Stewart: Our strong cash position underpins our financial capacity to support strategic growth opportunities that may arise. Before handing the call back to Luc, I will remind shareholders we are holding our annual general and special meeting on 25 September. We are filing proxy materials today with information on how to vote, and we urge all shareholders to cast a vote. I will now turn the call back to Luc for closing remarks.

Speaker #2: We are filing proxy materials today with information on how to vote, and we urge all shareholders to cast a vote. I will now turn the call back to Luke for closing remarks.

Speaker #1: Thank you very much,

Speaker #3: Tom. Starting fiscal 2027 with broad-based growth across all our business line and improved margins sets a strong tone for the year. We're confident. We're energized.

Luc Mongeau: Thank you very much, Tom. Starting fiscal 2027 with broad-based growth across all our business line, improved margins sets a strong tone for the year. We are confident, we are energized, and everyone is pulling in the same direction with pace and with common purpose to build a global cannabis company. Don't get me wrong. While Q1 results are definitely a step in the right direction, we are not satisfied yet. We are taking tangible action towards increasing yield and cultivation, accelerating supply chain efficiencies, and strengthening our global supply chain to drive growth and improve margins for quarters to come. We are becoming focused and disciplined operators, relentless in execution, strategic prioritization, and financial performance. Today, we unveiled a new corporate visual identity to match our growing ambition and reinvigorated organization.

Speaker #3: And everyone is pulling in the same direction with pace and with common purpose to build a global cannabis company. Don't get me wrong. While first quarter results are definitely a step in the right direction, we're not satisfied yet.

Speaker #3: We're taking tangible action towards increasing yield and cultivation, accelerating supply chain efficiencies, and straightening our global supply chain to drive growth and improve margins for quarters to come.

Speaker #3: We're becoming focused and disciplined operators relentless in execution, strategic prioritization, and financial performance. Today, we unveiled a new corporate visual identity to match our growing ambition and reinvigorated organization.

Speaker #3: This identity reflects who we are, and what we're building. A company that believes in the power of cannabis as a catalyst for elevating human potential.

Luc Mongeau: This identity reflects who we are and what we are building, a company that believes in the power of cannabis as a catalyst for elevating human potential. We believe cannabis is a global economic force, one that will rival the largest consumer categories in the world, and we intend to be among the companies that lead it. Building a global consumer-centric company with a clear and uncompromising ambition to lead the world in bettering lives through cannabis. That's the company behind the results we have just shared with you, and it's the company you will see reflected in our new identity. None of our progress outlined on today's call happens without our people. Thank you to our entire team for their relentless hard work and passion. We are just getting started. Operator, we will now take questions.

Speaker #3: We believe cannabis is a global economic force one that will rival the largest consumer categories in the world, and we intend to be among the companies that lead it.

Speaker #3: Building a global, consumer-centric company with a clear and uncompromising ambition to lead the world in bettering lives through cannabis. That's the company behind the results we've just shared with you.

Speaker #3: It is the company you'll see reflected in our new identity. None of our progress outlined on today's call happens without our people. Thank you to our entire team for their relentless hard work and passion.

Speaker #3: We're just getting started. Operator, we will now take questions.

Speaker #4: 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 touchdown phone.

Operator: 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 1 on your touchtone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. We do ask that you limit yourself to one question. If you have additional questions, you may hit star 1 again. First question comes from Aaron Grey with Alliance Global Partners. Please go ahead.

Speaker #4: You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the two.

Speaker #4: If you are using a speakerphone, please lift the handset before pressing any keys. We do ask that you limit yourself to one question. If you have additional questions, you may hit star one again.

Speaker #4: First question comes from Erin Gray with Alliance Global Partners. Please go ahead.

Speaker #5: Hi. Thank you very much for the questions here. I just want to talk a bit about international and some of your initiatives. With added GMP certifications, just can you talk about the broader landscape of international?

Aaron Grey: Hi. Thank you very much for the questions here. Just want to talk a bit about international and some of your initiatives, with added EU GMP certifications. Can you talk about the broader landscape of international? We are hearing about countries getting tighter in terms of companies needing to adhere to EU GMP compliance. How does this potentially set up for you to be in a more advanced position that you referred to in your prepared remarks? Do you feel like you will now have enough cultivation as well as processing through the EU GMP supply chain to ramp up those international sales through the rest of fiscal year 2027 and beyond? Thank you.

Speaker #5: We're hearing about countries getting tighter in terms of companies needing to adhere to GMP compliance. How does this potentially set up for you to be in and more advanced position that you referred to in your prepared remarks?

Speaker #5: And do you feel like you'll now have enough cultivation as well as processing through the GMP supply chain to ramp up those international sales through the rest of fiscal year 27 and beyond?

Speaker #5: Thank you.

Speaker #3: Yeah. Thank you for your question. Good morning. Listen, we're taking all the right actions and to really set up an extremely robust end-to-end supply chain to win for quarters to come in Europe.

Luc Mongeau: Yeah, thank you for your question. Good morning. Listen, we're taking all the right actions to really set up an extremely robust end-to-end supply chain to win for quarters to come in Europe. You know what I mean? One thing I can say about Canopy is that we take cannabis extremely seriously. We've got the internal capabilities to really build integrity, reliability, and trust in the supply chain. We've been working for quarters in really building the supply chain that meets and qualifies for EU GMP. So as I said in my remarks, we're now end to end when it comes to flower, growing and importing and distributing in Germany and across Europe.

Speaker #3: You know what I mean? One thing I can say about canopy is that we take cannabis extremely seriously. We've got the internal internal capabilities to really build integrity reliability and trust in the supply chain.

Speaker #3: We've been working for quarters in really building the supply chain that meets and qualifies for EU GMP. So as I said in my remark, we're now end-to-end when it comes to flower growing and importing and distributing in Germany and across Europe.

Speaker #3: We take an additional step to make sure that we're Smith Falls facility qualifies as well. And we should get we should receive qualification approval during this fiscal year, which will allow us to have a complete range of product end-to-end to meet the market.

Luc Mongeau: We take an additional step to make sure that our Smiths Falls facility qualifies as well, and we should receive qualification approval during this fiscal year, which will allow us to have a complete range of product end to end to meet the market. So we're really building something that meets all the demands. And if there was even more stringent, for lack of a better word, enforcement of the EU GMP, we're extremely well positioned to meet this. And that's what gives us confidence that we will grow this, continue to grow this business for quarters to come.

Speaker #3: So we're really building something that meets all the demands and if there was even more stringent lack of a better word enforcement of the EU GMP, we're extremely well positioned to meet this.

Speaker #3: And that's what gives us confidence that we will grow this continue to grow this business for quarters to come.

Speaker #5: Thank you very much. I'll jump back in the queue.

Speaker #4: Can we apply with cannabis? Please go ahead.

Aaron Grey: Thank you very much. I'll jump back in the queue.

Speaker #5: Thank you. Good morning. Tom, one of the key themes throughout the prepared remarks was the discussion around margin and margin expansion. I think specifically material expected margin expansion on some of the initiatives.

Operator: Ken Tai with Canaccord Genuity, please go ahead.

Ken Tai: Thank you, and good morning. Tom, one of the key themes throughout the prepared remarks was the discussion around margin and margin expansion. I think specifically material expected margin expansion on some of the initiatives. Could you speak to what is the baseline you are working from? Obviously, we saw some 230 odd bips year-on-year in this quarter. When you speak to, and I am thinking about your margin profile going forward, are we talking something, you know, bracketing that 30%, 30% plus level? Anything you could provide there to help us, you know, sort of try and get it would be appreciated.

Ken Tyghe: Thank you, and good morning. Tom, one of the key themes throughout the prepared remarks was the discussion around margin and margin expansion. I think specifically material expected margin expansion on some of the initiatives. Could you speak to what is the baseline you are working from? Obviously, we saw some 230 odd bips year-on-year in this quarter. When you speak to, and I am thinking about your margin profile going forward, are we talking something, you know, bracketing that 30%, 30% plus level? Anything you could provide there to help us, you know, sort of try and get it would be appreciated.

Speaker #5: Could you speak to what is the baseline you're working from? Obviously, we saw some 230-odd bits year on year in this quarter. When you speak to and I'm thinking about your margin profile going forward, are we talking something bracketing that 30%, 30% plus level?

Speaker #5: Anything you could provide there to help us better triangulate would be appreciated.

Speaker #6: Yeah. Good morning, Carrick. I mean, obviously long term, we're trying to get that margin up closer to some of our competitive set, like closer to the 50% margin.

Tom Stewart: Yeah. Good morning, Cameron. Obviously long term, we are trying to get that margin up closer to some of our competitive set, like closer to the 50% margin. We know that is going to be a long way in the future. I would say for baseline, we are looking at this quarter on an adjusted basis, we were 31%. So I would say in the near term, we are targeting to get up to the mid-30s, and hopefully on the higher end as we are exiting this year. But as Luc laid out, a lot of the initiatives we are talking about, improving the amount of output that we have from a yield standpoint, improving quality, all of that will fuel our margin improvement, as well as the integration activities with MTL as we really become one organization with one set of assets that we are leveraging for the full potential there.

Speaker #6: We know that's going to be a long way in the future. I would say for kind of baseline, we're looking at this quarter on an adjusted basis.

Speaker #6: We were 31%. So I would say kind of in the near term, we're targeting to get up to the mid-30s and hopefully on the higher end as we're exiting this year.

Speaker #6: But as Luke laid out, a lot of the initiatives we're talking about improving the amount of output that we have from a yield standpoint, improving quality, all of that will fuel our margin improvement.

Speaker #6: As well as the integration activities with MTL, as we really become one organization with one set of assets that we're leveraging for the full portfolio.

Speaker #6: So definitely I would say in the near term, we're targeting mid-30s. Hopefully exit in a bit higher rate as we go into this year.

Tom Stewart: So definitely, I would say in the near term, we are targeting mid-30s. Hopefully exiting at a bit higher rate as we go into this year. Luc, anything to add?

Speaker #6: Luke, anything?

Speaker #3: Yeah. For me, listen, those are not pie in the sky dream. As you can imagine, we spend a lot of time last year really working on fixing the foundations of the business.

Luc Mongeau: Yeah, for me, listen, those are not pie in the sky dreams. As you can imagine, we spent a lot of time last year really working on fixing the foundations of the business. We took an approach where we want to measure twice and cut once. So we spent a lot of time last year really ensuring that what we were aiming for, we have the plans for. As I said in my remarks, post quarter end, we press a button, the work has started. As I said, the teams are working in one direction with pace, which gives us really a high level of confidence that we will see that margin continue to inch upwards for quarters to come.

Speaker #3: We took an approach where we want to measure twice and cut once. So we're you know what I mean? We spend a lot of time last year really ensuring that what we were aiming for, we have the plans for.

Speaker #3: And as I said in my remarks, post-quarter end, we press the button, the work has started. And as I said, the teams are working in one direction with pace, which gives us really a high level of confidence that we will see that margin continue to inch upwards for quarters to come.

Speaker #5: Great. Thank you. I'll get back in queue.

Speaker #4: Federico Gomez with ATB CoreMark, please go ahead.

Ken Tai: Great. Thank you.

Ken Tyghe: Great. Thank you.

Ken Tai: I will get back in queue.

Ken Tyghe: I will get back in queue.

Speaker #5: Thank you. Good morning. I want to ask about cultivation. It seems like it's cultivation efficiency is a big part of your plan to expand margins and with EMDL integration as well.

Operator: Frederico Gomes with ATB Capital Markets, please go ahead.

Frederico Gomes: Thank you. Good morning. I want to ask about cultivation. It seems like cultivation efficiency is a big part of your plan to expand margins and with the MTL integration as well. How far along are you in that journey of getting cultivation where it needs to be? I imagine that is going to take some time to trickle through financials, but how much of that margin expansion just comes from cultivation efficiency, and how far along are you in that? Thank you.

Speaker #5: So how far along are you in that journey of getting cultivation where it needs to be? I imagine that it's going to take some time to trickle through financials, but how much of that margin expansion just comes from cultivation efficiency and how far along are you in that?

Speaker #5: Thank you.

Speaker #3: Yes. Thank you for your question. Listen, we're passionate about flower and we have intentions to be a trusted global leader. So for us, it starts with flower.

Luc Mongeau: Yes, thank you for your question. Listen, we are passionate about flower, and we have intentions to be a trusted global leader. So for us, it starts with flower. It started with the acquisition of MTL. We have been very vocal about that. We brought in the expertise, the passion, the know-how to grow great flower, to achieve great level of THC yield and decent costs per gram. As you can imagine, that was one of the priorities as soon as we started integrating the business. As I said earlier, we have been measuring twice and hoping to cut once. The last few quarters have really been spent working with the master growers of MTL to ensure that we understand our strain, we understand the capabilities of our facilities. We have been working on defining the CapEx program, making sure the new processes are really well-defined.

Speaker #3: It started with the acquisition of MTL. We've been very vocal about that. We brought in the expertise, the passion the know-how to grow great flower to achieve great level of THC.

Speaker #3: Yield and decent costs per grab. As you can imagine, that was one of the priorities as soon as we started integrated integrating the business.

Speaker #3: As I said earlier, we've been measuring twice and hoping to cut once. So the last few quarters have really been spent working with the master growers of MTL to ensure that we understand our strain, we understand the capabilities of our facilities.

Speaker #3: We've been working on defining the capex program, making sure the new processes are really well defined. As you can understand, with cultivation, it takes an amount of time while you put in scenes of the ground and you can harvest.

Luc Mongeau: As you can understand with cultivation, it takes an amount of time while you put seeds in the ground, and you can harvest. We should really start seeing impact at the end of Q2, beginning of Q3, when we start gradually realizing the benefits of improved yield and improved quality.

Speaker #3: We should really start seeing impact. At the end of Q2, beginning of Q3, when we start realizing gradually realizing the benefits of improved yield and improved quality.

Speaker #5: Thank you very much.

Speaker #4: Bill Kirk with West Capital, please go ahead.

Frederico Gomes: Thank you very much.

Speaker #7: Hey, good morning, everyone. So my question is on capital spending. Your capital spending amounts are below some of your peers. And so are those areas where you're trying to make some progress on gross margin and international growth.

Operator: Bill Kirk with ROTH Capital, please go ahead.

Bill Kirk: Hey, good morning, everyone. My question is on capital spending. Your capital spending amounts are below some of your peers, and so are those areas where you are trying to make some progress on gross margin and international growth. I guess my question is, do you need to increase capital spending in any meaningful way to improve those yields that will unlock gross margin? Or need to increase capital spend to develop those international assets to unlock more growth there?

Speaker #7: So I guess my question is, do you need to increase capital spending in any meaningful way to improve those yields that unlock gross margin or need to increase capital spend to develop those international assets to unlock more growth there?

Speaker #6: I have a great question. So I think from our standpoint, there will be some modest capex. Right now, we do think the operational assets we have in place are sufficient.

Tom Stewart: Hi, Bill. Great question. I think from our standpoint, there will be some modest CapEx. Right now we do think the operational assets we have in place are sufficient, so we are not talking greenfield-type facility builds. But in terms of investing in the facilities, that is something we will be doing. I would preface it with just a modest amount of capital. Yeah, we are probably underspending historically on the CapEx side, and this is an area where we see the investment and the near-term return there as we get improved cultivation and really helping with the yield. Overall, I think we have the right assets in place. Now it is using those assets to their full potential. That might include a little bit of CapEx to get it going.

Speaker #6: So we're not talking greenfield-type facility builds. But in terms of investing in the facilities, that is something we will be doing. But I would preface it with just a modest amount of capital.

Speaker #6: But yeah, we are probably underspending historically on the capex side. And this is an area where we see kind of the investment and kind of the near-term return there as we get improved kind of cultivation.

Speaker #6: And really helping with the yield. But overall, I think it's I think we have the right assets in place. Now it's using those assets to their full potential.

Speaker #6: That might include a little bit of capex to get it going.

Speaker #7: Okay. And if I could sneak a housekeeping in on the Canadian medical, I didn't see it in the queue, but maybe I missed it.

Bill Kirk: Okay. If I could sneak a housekeeping in. On the Canadian medical, I did not see it in the queue, but maybe I missed it. What was the MTL contribution to that segment in the quarter? I am basically asking to try to get a sense for how large the reimbursement change headwind was in the period.

Speaker #7: What was the MTL contribution to that segment in the quarter? And I'm basically asking to try to get a sense for how large the reimbursement change headwind was in the period.

Speaker #6: Yeah. So we don't disclose MTL medical separate bill because we manage it all as one business, both across kind of the cannabis segment and then even within our revenue channel.

Tom Stewart: Yeah. We do not disclose MTL medical separate, Bill, because we manage it all as one business, both across the cannabis segment, and then within our revenue channel. That is not disclosed separately, but obviously the headline reimbursement reduction was 29% that we had, and I would say we weathered that storm better than probably some of our competitors in the quarter.

Speaker #6: So that's not disclosed separately, but obviously the headline reimbursement reduction was 29% that we had. And I would say we weathered that storm better than probably some of our competitors in the quarter.

Speaker #7: Okay. Thank you.

Speaker #3: If I can just add color, I mean, building on what Tom said, I think we weathered the storm with this change. And we now have a new basis upon which we really mean to grow.

Bill Kirk: Okay. Thank you. I will pass it on.

Luc Mongeau: If I can just add color, building on what Tom said, I think we weathered the storm with this change, and we now have a new basis upon which we really mean to grow. Even though these changes happen, in our remarks, we were able to continue to improve patient count and number of orders, which are really the main drivers of your revenues. We were able, as well, as Tom mentioned, to take the right action to mitigate the impact on our margins. For us, it is a business that we strongly believe in. We believe in providing the right care for patients and veterans, and we will continue to deploy efforts to expand this business going forward.

Speaker #3: So even though these changes happen, as in our remarks, we were able to continue to improve patient count and order number of orders, which is really our domain drivers of your revenues.

Speaker #3: And we were able as well as Tom mentioned to say the right action to mitigate the impact on our margins. So for us, it is a business that we strongly believe in.

Speaker #3: We believe in providing the right care for patients and veterans. And we will continue to deploy efforts to expand this business going forward.

Speaker #7: Thank you, Luke. Thank you, Tom.

Speaker #4: Ladies and gentlemen, as a reminder, if you have any questions, please press star one. Pablo Swanek, Swanek and Associates, please go ahead.

Bill Kirk: Thank you, Luc. Thank you, Tom.

Operator: Ladies and gentlemen, as a reminder, if you have any questions, please press star one. Pablo Zuanic at Zuanic & Associates, please go ahead.

Speaker #3: Thank you and good morning, everyone. Just following up on the domestic medical question, look, I mean, the industry has done a great job in terms of increasing penetration with veterans.

Pablo Zuanic: Thank you, and good morning, everyone. Just following up on the domestic medical question. Luc, the industry has done a great job in terms of increasing penetration with veterans. I think it was 4% back in 2021, 8% now. Where do you see that going? Is a 15% penetration level three, four years down the road reasonable? How do you think about that? And then related to that, any further commentary you can make about how these patients, the reimbursed patients, have any changes in consumer behavior, if we can use that term here, or it has all been pretty much absorbed by the companies in terms of pricing. Thank you.

Speaker #3: I think it was 4% back in '21, 8% now. Where do you see that going? I mean, is the 15% penetration level three, four years down the road reasonable?

Speaker #3: How do you think about that? And then related to that, any further commentary you can make about how these patients, the reimbursed patients, have any changes in consumer behavior, if we can use that term here, or it's all been pretty much absorbed by the companies in terms of the pricing.

Speaker #3: Thank you.

Speaker #6: Yeah. So I'll start, Pablo, and good morning. So in terms of penetration, I think 15% is probably fairly high. I mean, we do see continued growth in the Canadian cannabis market with veterans.

Tom Stewart: Yeah. I will start, Pablo, and good morning. In terms of penetration, I think 15% is probably fairly high. We do see continued growth in the Canadian cannabis market with veterans. We have demonstrated that we can grow in a declining market in the medical space as well over the past few years. In terms of buying patterns, I would say we are adding new patients. Obviously, order values are going down as a result of the reimbursement, but our focus is really new patient acquisition, new veteran acquisitions. It is still one of the most profitable markets in the globe. So Canadian medical clearly is continuing to be a point of focus for us. But I think 15% is probably a bit high from a market penetration standpoint.

Speaker #6: We've demonstrated that we can grow in a declining market in the medical space as well over the past few years. In terms of buying patterns, I would say we are seeing we are adding new patients.

Speaker #6: Obviously, order values are going down as a result of the reimbursement. But our focus is really new patient acquisition, new veteran acquisitions. It's still one of the most profitable markets in the globe.

Speaker #6: So Canadian medical clearly for us. But I think it'll be 15% is probably a bit high from market penetration standpoint. But for us, it's really Q1, as Luke said, was a bit of a reset in terms of our baseline.

Speaker #6: And I would expect that we continue to have steady growth over the past as we've demonstrated in prior years. On the medical side. I don't know, Luke, if you want to.

Tom Stewart: But for us, it is really Q1, as Luc said, was a bit of a reset in terms of our baseline, and I would expect that we continue to have steady growth over the past, as we have demonstrated in prior years on the medical side. I do not know, Luc, if you want.

Speaker #3: Thank you. Look, I mean, can I ask just to follow up? And obviously, congratulations on all the progress the company is making on domestic reg, domestic medical, international, the MTL deal.

Pablo Zuanic: Thank you. Luc, can I ask just a follow-up? And obviously, congratulations on all the progress the company is making on domestic reg, domestic medical, international, the MTL deal. So if maybe it is not fair for us analysts to ask you about the US, right? But there is so much focus on the US from the investor side, given all the changes that are taking place there. And historically, we thought of Canopy Growth as having the best beachhead, if I can use that term, with Acreage, Wana, and Jetty there. But how should we think about that now going forward? Obviously, it does not seem as big a priority as it was in the past for Canopy Growth. Any color would help. Thank you.

Speaker #3: So if I maybe, it's not fair for us analysts to ask you about the US, right? But there's so much focus on the US, on the investor side, given all the changes that are taking place there.

Speaker #3: And historically, we thought of cannabis growth as having the best beachhead, if I can use that term, with acreage, guana, and jetty there. But how should we think about that now going forward?

Speaker #3: Obviously, it doesn't seem as big a priority as it was in the past for cannabis growth. Any color would help. Thank you.

Speaker #2: Yes. Thank you for the question. Listen, we continue to monitor the position, the situation of the market in the US very, very closely. And you heard me, we've been consistent about fixing the foundation.

Luc Mongeau: Yes. Thank you for the question. Listen, we continue to monitor the situation of the market in the US very closely. You heard me, we have been consistent about fixing the foundation. It is ensuring that we build a core Canopy Growth organization, Canadian and internationally, that provides positive adjusted EBITDA. That is where we continue to focus the bulk of our efforts, and it is paying off. As I said, we continue to monitor our position in the US. We are happy with the performance of Jetty in the US. We have a position with TerrAscend. You saw they released their results earlier this morning or yesterday. They are doing really well. But the focus remains on really accelerating our growth internationally and domestically in Canada.

Speaker #2: It's ensuring that we build a core canopy growth organization, Canadian and in internationally that is positive, that provides positive EBITDA. That's where we continue to focus the bulk of our efforts.

Speaker #2: And it is paying. It is paying off. As I said, we continue to monitor our position in the US. We're happy with what Jetty is, the performance of Jetty in the US.

Speaker #2: We have a position with Terrascent. You saw the release of results earlier this morning or yesterday. They're doing really well. But the focus remains on really accelerating our growth internationally and domestically in Canada.

Speaker #3: Okay. Thank you.

Speaker #4: Thank you. This concludes Canopy Growth's first quarter 2027 financial results conference call. I'll replay up this conference call. We'll be available until November 5th, 2026.

Pablo Zuanic: Thank you.

Operator: Thank you. This concludes Canopy Growth's Q1 2027 financial results conference call. A replay of this conference call will be available until 5 November 2026, 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 additional questions. Thank you for attending today's call.

Speaker #4: And it 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 additional questions.

Q1 2027 Canopy Growth Corp Earnings Call

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Canopy Growth

Earnings