Curaleaf Holdings, Inc.

Good day and welcome to the CuraLeaf Holdings fourth quarter and full year 2025 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. We ask that you please limit yourself to one question. And please note that this event is being recorded. I would now like to turn the conference over to Camilo Lyon, Chief Investment Officer. Please go ahead.

Good afternoon, everyone, and welcome to Curalee Polving's fourth quarter and full year 2025 conference call. Today, I am joined by Chairman and Chief Executive Officer Boris Jordan and Chief Financial Officer Ed Kramer. Before we begin, I'd like to remind everyone that the comments on today's call will include forward-looking statements within the meaning of Canadian and United States security laws, which by their nature involve estimates, projections, plans, goals, forecasts, and assumptions, including the successful integration of acquisitions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements on certain material factors or assumptions were applied in drawing the conclusion or making a forecast in such statements these forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events we undertake no obligation to update or revise any forward-looking statements whether as a result of new information future events or otherwise except as required by applicable law additional information about the material factors and assumptions forming the basis of the forward-looking statements and risk factors can be found in the company's filings and press releases on CDAR and EDGAR. During today's conference call, in order to provide greater transparency regarding Curalee's operating performance, we will refer to certain non-GAAP financial measures and non-GAAP financial ratios that involve adjustments to GAAP results. Such non-GAAP measures and ratios do not have a standardized meaning under U.S. GAAP. Any non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by U.S. GAAP. should not be considered measures of Curaleaf's liquidity and are unlikely to be comparable to non-GAAP financial measures provided by other companies. Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable U.S. GAAP financial measure under the heading Reconciliation of Non-GAAP Financial Measures in our earnings press release issued today and available on our investor relations website at ir.curaleaf.com. With that, I'll turn the call over to Chairman and CEO, Boris Shorten.

Boris? Thank you, Camilo. Good afternoon, everyone, and thank you for joining us to discuss our fourth quarter and full year 2025 results. We closed 2025 with clear momentum, delivering fourth quarter revenue of $333 million, our strongest performance in six quarters. Revenue increased 5% sequentially and 2% year over year, bolstered by a broad-based return to growth in nearly all of our domestic markets, despite a persistently challenging pricing environment. Our international team closed out an impressive year with $51 million in the fourth quarter revenue, representing 10% sequential growth and 65% year-over-year revenue growth. Adjusted gross margin expanded to 49%, up 20 basis points from last year, as the benefits from productivity gains in our cultivation facilities outweighed price compression. Adjusted EBITDA totaled 69 million, or 21% of sales, inclusive of a 120 basis point drag from international. Operating and free cash flow from continuing operations were $42 million and $25 million, respectively. That's after paying $39 million in acquisition-related debt during the quarter. For the full year, revenue reached $1.27 billion with adjusted gross margin of 50% and adjusted EBITDA of $275 million, or 22% of revenue. We generated $152 million in operating cash flow and $89 million in free cash flow from continuing operations. while ending the year with $102 million of cash in the balance sheet. These results were delivered despite a third consecutive year of double-digit price compression, underscoring the strength, discipline, and resilience of our operating model and the success of our return to roots plan. Reflecting on the progress we made in 2025, we took decisive actions to fundamentally reset and strengthen the business. First, we transformed our cultivation network. Through disciplined execution and best practice standardization, we doubled yields across our facilities, materially lowering production costs and mitigating the impact of sustained price compression on margins. Importantly, this increase in output did not come at the expense of quality. By leveraging genetics from Dark Heart, we significantly improved flower quality, consistency, and strain diversity. In the fourth quarter, average flower potency across our facilities reached 31%, the highest level in our history. This combination of higher yields and higher quality represents a structural improvement in our cultivation platform, not a temporary gain. Second, we overhauled our buying, planning, and merchandising functions to better align supply with demand at the local level. The impact was immediate, particularly in Florida, where stronger product allocation discipline paired with consistently higher quality flour drove meaningful improvements in conversion, traffic, and customer satisfaction. This created a virtuous cycle of stronger sell-through, improved in-stock positioning, and enhanced customer loyalty. We are now systematically replicating this playbook across our other states, and we are encouraged by the early traction. We believe there remains substantial runway to unlock incremental productivity and same-store growth. Third, we accelerated innovation across our product portfolio. In April, we launched Anthem Classic, our cigarette-style pre-rolls, in select markets to overwhelming consumer response. We followed that in September with Anthem Bold, our infused pre-roll line, which has also exceeded expectations. Demand has consistently outpaced supply. In less than a year, Anthem has become a top five national pre-roll brand in its four launch markets, New York, New Jersey, Illinois, and Arizona, demonstrating the strength of our innovation engine and brand building capability. These initiatives represent just a portion of the foundational work completed in 2025. We are now seeing the benefits of flow through the P&L in the form of improved margins, stronger sell-through, and organic growth momentum. Importantly, we believe there remains significant opportunity to further amplify these gains as we continue to scale the operating discipline and innovation framework we have put in place. While price compression continues to impact most markets, we believe 2025 represents the trough. Structural changes to the industry, most notably the federal hemp ban scheduled to take effect in November, are expected to materially alter market dynamics. Over the past three years, we believe the regulated cannabis market was disrupted not by excess cultivation capacity, but by the rapid proliferation of low-cost, lightly regulated, hemp-derived THC products that could be shipped nationally. As this loophole closes and consumers migrate back to the regulated dispensary channel, we expect demand to normalize, pricing pressures to abate, and the industry to return to a more rational and sustainable pricing environment. A defining moment for the U.S. cannabis industry occurred last December when President Trump issued an executive order directing the reclassification of cannabis from Schedule 1 to Schedule 3. This is the most consequential federal action taken on cannabis in the last 55 years. When, not if, the final rule becomes effective, which we expect to occur ahead of the midterm elections, it will serve as the foundational catalyst for broader reform. Momentum from rescheduling will bring us closer to a U.S. exchange uplisting, expanded access to money center institutions, and credit card usage, which will create a fundamentally improved operating and capital markets landscape. These anticipated regulatory and capital market improvements already driving increased consolidation across the sector. We are seeing this primarily through asset sales by undercapitalized operators, targeted both on retail acquisitions by scaled platforms seeking to leverage their fixed infrastructure and smaller category-specific brands merging to achieve scaled operations. As a result, we expect industry consolidation to accelerate meaningfully in 2026, led by a few operators, of which Pure Leaf is one. with strong balance sheets, access to capital, and proven execution. We have built our business through both organic and acquisitive means and will leverage investor appetite to partner with scaled operators to further increase our leading position in the market. In support of this opportunities that we last week, we completed the refinancing of our 475 million senior secured maturing notes maturing on December 15th, 2026. of which $457 million was outstanding, issuing a new and $500 million senior secured note with a three-year maturity at an 11.5% coupon due February 18, 2029. This landmark transaction sets a new precedent as the largest transaction in U.S. cannabis, extends our runway, and significantly enhances our financial flexibility. I am pleased with the strong demand expressed in our offering from both new and existing investors. demonstrating the growing institutional interest, not only in Pureleaf, but also the broader cannabis industry. With this refinancing complete, we are well positioned to pursue growth initiatives while maintaining disciplined capital allocation. With our debt refinancing and return to roots plan now complete, we have decisively reset the foundation of our business. We have strengthened leadership across critical functions, embedded data-driven decision-making, and sharpened operational execution. Our strong fourth quarter performance reflects the evolution of our Built for Growth initiative, driving organic growth through high-quality brand portfolio, premium customer experiences, and operational excellence. We believe this positions the company for sustained growth and value creation as industry conditions improve. Importantly, the results we delivered in the fourth quarter provide tangible proof points that reinforce our conviction in the direction we're heading. During the quarter, the Curley family of brands captured the number one overall market share position according to Hoodie Analytics, with Select maintaining its number one ranking in the vape category. These outcomes are a direct result of disciplined execution and brand focus, and they reflect the collective efforts of our employees across the organization who consistently support our portfolio brands and deliver high-quality service to our customers. Domestically, our fourth quarter year-over-year outperformance was driven primarily by strength in Ohio, Utah, Pennsylvania, and Florida, each a clear example of our operating reset translating into tangible results. Ohio continues to benefit from its transition to adult use coupled with the successful ramp of two new stores. Early performance has exceeded expectations reflecting both favorable market dynamics and disciplined execution at the store level. Utah remains a healthy and stable medical market where we are gaining share through increased consumer adoption of our brand portfolio and expanded wholesale penetration. Our focused approach to product mix and distribution continues to unlock incremental growth. Pennsylvania delivered strong performance throughout the year, driven largely by the consistently high-quality flower output from our cultivation network. The improvements we made in yield, potency, and strain diversity have directly translated into stronger sell-through and brand loyalty. Similarly, Florida's resurgence is directly tied to a step-change improvement in our flour quality and in-store execution. As product consistently improved, we saw corresponding gains in traffic, conversion, and customer satisfaction, validating the structural work completed earlier in the year. I would be remiss if I didn't highlight that we believe is one of our most significant and fastest growing opportunities in 2026, New York. After growing our business in the state by 14% last year and achieving the number one overall brand share position, we have established a leadership platform in one of the most important emerging adult use markets in the country. We are now intensely focused on extending that leadership by becoming the brand house of choice for wholesale partners statewide. Our portfolio is uniquely positioned to capture growth across multiple segments with Anthem driving momentum in pre-rolls, Select strengthening our vapes, and Dark Heart elevating our premium flower offering. As distribution expands and market infrastructure matures, we believe our scale, brand equity, and execution discipline position us to capture disproportionate share as the market ramps. New York represents not only a near-term growth catalyst, but a strategic long-term value driver within our U.S. portfolio. The common thread across all these states is clear, high-quality products, disciplined execution, and elevated service levels. That formula is repeatable, scalable, and central to how we intend to drive performance in 2026. Innovation remains a core driver to our growth strategy to expand our addressable market and attract new customers We must consistently lead with differential products, new flower genetics, advanced delivery technologies, and category-defining formats that elevate both quality and customer experience. As part of that commitment, next month we will launch Brick 2.0, the next generation of our highly successful vape platform across 13 states. Building on the strong performance of Brick, this upgraded version enhances functionality, reliability, and overall user experience. positioning us to further strengthen our share in the vape category. In parallel, we are expanding Dark Heart as our flagship premium flower offering, reinforcing our ability to compete at the high end of the market with differentiated genetics and superior consistency. We will share more details on that expansion in the coming months. Our objective in every category we enter is not simply participation, but leadership through uncompromising product quality and a superior customer service. Sustained focus and disciplined execution against these principles will enable durable market share gains, stronger brand equity, and long-term value creation for shareholders. Pure Leaf International delivered another exceptional revenue quarter, generating revenue of $51 million, an increase of 65% year-over-year, and putting the business on an annual run rate of over $200 million, led by strong performance in Germany and the United Kingdom. This momentum reflects the strength of our differentiated platform across key European markets. In Germany, not only are we the largest supplier of flour to the market, but also consumer demand remain robust for our portfolio of brands. Our value-tier brand, Chuala, continued to gain traction with cost-conscious patients, while our humid vape, the first medically approved inhalation device, also benefited from strong consumer adoption. Germany remains one of the most dynamic and scalable medical markets in Europe, and we are well positioned to cause both premium and value tiers to further leverage our strong market position. In the UK, CureLeaf Clinic expanded its active patient count once again, reinforcing our number one market share position. The UK continues to be a steady, consistently growing market for us, underpinned by disciplined patient acquisition, high retention rates, and vertically integrated operations that leverage technology. Elsewhere, Poland began to recover meaningfully following the easing of our prior regulatory restrictions on telemedicine. Patient access has improved, demand trends are strengthening, and we are seeing tangible momentum reemerge, positioning the market for continued growth as we move into 2026. In Australia, we are prioritizing expansion in 2026 by leveraging our European innovation pipeline to introduce new products tailored to local demand. we see a clear opportunity to capture incremental market share through product quality, brand positioning, and disciplined commercial execution. Collectively, these markets demonstrate the breadth and resilience of our international platform. They provide multiple growth vectors and reinforce our ability to allocate capital towards markets with favorable regulatory trajectories and attractive long-term returns. Turning to 420 Pharma, our premium German brand, As anticipated, the put option on the remaining 45% ownership stake was exercised, and we will fully own the business and the brand. Upon closing, we will have 100% ownership of our international operations following the buyout of our minority partner in Curaleaf International last summer. Full ownership meaningfully simplifies our corporate structure and enhances transparency around the performance and valuation of our international segment. This is particularly relevant in recent cross-border transactions between Canadian and German operators, which have helped clarify valuation benchmarks in the European market. With complete control of our international platform, we are better positioned to drive strategic alignment, capture full economic upside, and maximize long-term shareholder value. Turning to new international France and Turkey, Regulators in each country are actively advancing rulemaking process that will define their respective medical cannabis frameworks. In Spain and France, we could see programs commence as early as the fourth quarter with initial commercialization centered predominantly on extracts and distribution expected through hospital pharmacy channels. In Turkey, we currently anticipate a program launch in the first quarter of 2027. While precise timing remains subject to regulatory finalization, progress continues to move constructively. As we have seen across other European markets, these programs are likely to begin modestly in scale before ramping over time as patient enrollment expands, supply chains mature, and regulatory clarity improves. Importantly, as foreign factor restrictions evolve beyond extracts and access broadens, we expect growth trajectories to accelerate meaningfully. Over the longer term, we believe these markets will Markets with a combined population of over 200 million people have the potential to become significant contributors to our international business, reinforcing our first mover advantage and disciplined expansion strategy in Europe. In light of the restrictive regulatory challenges affecting hemp-derived THC products expected to take effect later this year, we made the deliberate decision to discontinue our hemp business. The revenue impact was de minimis as the business was still in its early startup phase. Similarly, we also decided to exit Missouri, a state in which we were subscale producers of formulated products with no vertical presence. These decisions reflect our disciplined approach to capital allocation and our focus on opportunities where we have scale, visibility, and clear path to attractive returns. While we believe there may be ultimately a role for hemp-derived THC beverages within the broader consumer landscape, the timing, regulatory framework, and economic parameters of that category remain highly uncertain. That said, consumer adoption of alternatives to alcohol continues to accelerate, representing a meaningful long-term trend. We will continue to monitor regulatory developments closely, including ongoing discussions among members of Congress, and we will reassess our participation if and when the category evolves into a more defined, regulated, economically compelling opportunity. 2025 was a pivotal and highly productive year for our company. We executed a necessary and comprehensive reset of the business. And with each successive quarter, our return to our roots plan gained traction and delivered measurable results. That work has now established a structurally stronger, more disciplined operating foundation. We are transitioning from stabilization to acceleration with our built for growth strategy. By leveraging the platform we have strengthened, improved cultivation economics, tighter merchandising discipline, brand-led innovation, and enhanced execution, we are positioned to drive sustainable organic growth. At the same time, we will remain disciplined but opportunistic in pursuing acquisitions that enhance scale, expand capabilities, and accelerate market share gains. Together, these initiatives position us to capture incremental share in 2026 and beyond. As the global leader in cannabis, we recognize our responsibility to advance the industry across regulatory environment, responsible adoption, and scientific research, areas where we will continue to commit capital. I want to recognize and thank our global team for the extraordinary focus and execution over the past year. Their commitment has reshaped the business and built a foundation capable of supporting growth both domestically and internationally. With that foundation now firmly in place, I'm confident in our trajectory and energized by the opportunities ahead. With that, I'll turn the call over to our CFO, Ed Kremer. Ed?