Canopy Growth Corporation

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 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, Investor Relations. Tyler, 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 Mongeau, and Interim Chief Financial Officer Tom Stewart. Before financial markets opened today, Canopy Growth issued a news release announcing the financial results for our first quarter fiscal 2026 ended June 30th, 2025. The news release and financial statements have been filed on EDGAR and CDAR and will be available on our website under the Investors tab. Before we begin, I would like to remind you that our discussion during this call will include forward-looking statements that are based on management's current view 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 press news release issued today. As of the three months ended June 30th, 2025, Canopy began reporting financial results for the following two reportable segments. Our cannabis segment includes the global production, distribution, and sale of a diverse range of cannabis and cannabis-related products. Our stores and Bickel segment includes the production, distribution, and sale of vaporizers and vaporizer accessories. It is important to highlight that information regarding segment net revenue and gross margin for the comparative periods has been recast to reflect the reportable segment changes. Please review today's earnings release and Canopy's reports filed with the SEC and CDAR 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 Canadian dollars unless otherwise stated. Following remarks by Luke and Tom, we will conduct a question and answer session where we will take questions from analysts. With that, I will turn the call over to Luke.

Thank you, Tyler. Good morning, everyone, and thank you for joining us today. It's great to be with you again to share the momentum building across our business and how it's translating into top-line growth. To begin, I'm very encouraged by the performance that our cannabis business delivered in the first quarter. Cannabis net revenue grew 24% year over year, while our team managed its way through significant structural changes while making meaningful progress on our cost reduction initiatives. In the first quarter, Canada medical net revenue grew 13%. marking three consecutive quarters of growth and continuing to outpace the market. International net revenues returned to growth at 4%, with Germany delivering triple-digit growth. In Canada adult use, net revenue increased 43%, our largest improvement in recent years. This performance reflects improved fundamentals across the business, from better supply planning and a more focused portfolio to stronger retail execution and patient engagement. Everyone at Canopy has stepped up and delivered. Let's unpack this growth, starting with Canada Medical. The team's ability to ensure consistent supply in market and deliver high quality best in class patient care delivered another quarter of double digit growth and cemented Canopy as one of the top medical businesses in Canada. This was achieved while delivering superior gross margin performance in this segment, which highlights the operational strength of this business. In Q1, Spectrum Therapeutics expanded several of its core offerings to further enhance value and the patient experience. Canada Medical has quietly become one of our most consistent performers, and I see it as a blueprint for how we can scale success in international markets. Turning to international markets. We're continuing to strengthen execution while positioning ourselves for future growth. In Europe, beyond improved product availability, we delivered double-digit revenue growth in Q1, including triple-digit growth in Germany. Bulk sales into the UK supported our performance across the region, while supply challenges temporarily impacted results in Poland. During the quarter, we advance a series of operational improvements to increase our cannabis supply into Europe. This work is expected to conclude in Q3 and support top line acceleration and margin accretion in the back half of the year. We recently appointed Miles Warren as managing director of European markets to lead our commercial strategy across the region. Miles will be focused on strengthening our routes to market, ensuring consistent supply, and building the infrastructures needed to drive long-term leadership in Europe. As we see it today, I'm energized by the progress we're seeing in Canada international market. Our fundamentals are getting better, and the team is focused on delivering sustainable growth. In Canada adult use, Q1 revenue grew 43% year over year. This performance was driven by a tighter, more targeted product portfolio aligned to high velocity, high demand SKUs, which strengthen our shelf presence. Our refined sales models that expanded national reach added nearly 4,800 new points of distribution in Q1, and contributed to larger order volume. We saw strong consumer demand for our core offerings, including Claiborne infused pre-rolls, with sales of 58% in the 13 weeks ended June 29th. Additionally, our Tweed and 7 Acres branded C-Cell all-in-one vapes, Tweed Blood Orange Kush Flower, and QuickKey's PRJ large SPACs also contributed to top line gains. This momentum is further showing up in several key operational metrics, including reduced growth costs, improved inventory management, and increased fill rates. Looking ahead, I am confident our retail ground game will keep driving distribution gains with new innovations to come supporting our continued momentum. At stores and deco, revenue was softer in Q1. This was due in large part to lapping strong sales from a year ago and weaker consumer demand and spending in key markets like the U.S. However, we remain confident in the long-term potential of this category-leading business. We're preparing to launch a new device in the coming weeks, which we expect will broaden the consumer appeal for stores and vehicles, premium vaporizers, and support performance in the second half of the year. Now I'll turn to cost discipline. Since launching our expense reduction initiative earlier this year, we've already delivered $17 million in annualized savings against our original $20 million target, reaching 85% of our goal to date, well ahead of plan. Our team is continuing to look for additional efficiencies this year to ensure we're operating as effectively as possible. Finally, I'd like to address our compressed margins. We understand where the pressure is coming from and are acting decisively to improve them, which Tom will unpack during his remarks. For me, improving gross margin is fundamental to strengthening our balance sheet, achieving positive EBITDA, and unlocking future growth. This is a company-wide priority, and we're embedding margin accountability into how we plan, execute, and measure performance across every part of the business. Before I close, I want to briefly touch on Canopy USA. We continue to see the US as one of the most promising long-term opportunities in global cannabis. While rescheduling and legalization hasn't happened yet, momentum continues to build. In Q1, Acreage focused on reducing operating expenses and completed the divestiture of non-core retail assets, allowing them to focus on vertically integrated markets. In addition, following the quarter end, Acreage secured $20 million in funding to support its operation. WADA maintained business continuity while streamlining costs and expanding the distribution of its new hemp-derived CBD beverages. And Jetty continues to outperform both top-line and profitability expectations. In closing, I'm excited by our top-line growth, the meaningful progress we've made on cost reductions, and improvement to key operational fundamentals in Q1. The priority now is to sustain this momentum, improve our margins, and achieve positive adjusted EBITDA. I'm confident we have the right focus, strategy, structure, and team in place to keep building momentum for the quarters ahead. I'll now turn it over to Tom to walk through our financials.