管理層發言
Good morning. My name is Joanna, and I will be your conference operator today. I would like to welcome you to Canopy Growth's Third Quarter Fiscal 2026 Financial Results Conference Call. 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 Chief Financial Officer, Tom Stewart. Before financial markets open today, Canopy Growth issued a news release announcing the financial results for our third quarter fiscal 2026 ended December 31, 2025. 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. 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 Canadian dollars unless otherwise stated. Following remarks by Luc 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 Luc.
Thank you, Tyler. Good morning, everyone, and thank you for joining us today. Q3 was a quarter where Canopy Growth delivered significant progress on multiple levels, and it reinforced my confidence that we're building a stronger business. For me, the fundamentals of the business are both about how the business is performing and our financial strength, which allows us to execute with discipline. Across the organization, our teams are focused on the right things, and that focus is starting to pay dividends. We're building a company that can consistently deliver superior experiences for consumers and patients, grow and manufacture high-quality products, and create consistent value over time. On the balance sheet, we ended the quarter with $371 million in cash and cash equivalents and a net cash position of $146 million, putting us on solid footing as we move into the next phase of execution. Post quarter end, we completed a USD 150 million recapitalization that improved our liquidity and extended all debt maturities to 2031. This gives us more flexibility around near-term financing, including how and when we use tools like the ATM and more room to make the right long-term decisions. This financial strength matters because it allows us to act intentionally. A good example is the proposed acquisition of MTL Cannabis, which we announced during Q3. MTL brings an accretive profile, a strong entrepreneurial leadership team, and high-quality cultivation capabilities to our platform. They've built a profitable, cash-generating business that we expect to be accretive to the combined organization. High-quality flower, cost efficiency, and operational discipline are the foundation of any scale cannabis company, and MTL strengthens our ability to achieve all three. Following closing, MTL will strengthen our leadership position in Canadian medical cannabis, enhance our presence in Quebec adult use, and importantly, provide high-quality flower supply that we can leverage to drive growth domestically and in international markets. Turning to our Q3 business results. The focus on fundamentals is really paying off. In Q3, we delivered our slimmest adjusted EBITDA loss to date, driven by continued cost discipline and improving execution across our Canadian medical and adult-use channels. In Canada medical, net revenue grew 15% year-over-year, our sixth consecutive quarter of growth, supported by a high-quality, best-in-class patient experience, strong service levels, and increasing engagement with insured patients. We've also taken deliberate actions to preemptively mitigate the financial impact of the proposed changes to the veterans reimbursement program while continuing to support veterans with best-in-class care and innovative high-quality products. We expect to continue strengthening this platform, maintain our leadership position in Canadian medical cannabis, and use our scale to elevate service and drive margin improvement over time. In Canadian adult-use, we're seeing continued momentum as well, with net revenue up 8% year-over-year. Growth this quarter was driven by strength in pre-rolls and vapes supported by focused innovation and improved execution at retail. What really gives me confidence here is not just the growth we're seeing today, but where we're directing our attention. We're shifting our focus towards elevating the quality of our brands, strengthening product innovation, and improving the quality, potency, and cost of our flower to delight consumers and patients alike. Looking ahead, our focus now turns to unlocking the next phase of growth, particularly in Europe, where we are spending significant time and attention. In Q3, we started stabilizing the international business, improving execution and laying the groundwork for growth with net revenue up 22% sequentially. Progress on EU GMP certification at our Smiths Falls facility, combined with our continued focus on elevating flower quality across our sites, is expected to position us to better serve international medical markets as demand continues to develop and regulations continue to evolve. Additionally, access to MTL's high-quality supply will fuel our strategy. There's more work to do, but I see a meaningful opportunity ahead. At Storz & Bickel, net revenue grew 45% sequentially, with the new VEAZY vaporizer reinforcing our strategy around affordability and portability. Our focus remains on accelerating product development and strengthening sales and market execution, especially in North America, where we believe cannabis consumers should experience the joy and fullness of flavor that an S&B device offers. In the U.S., through Canopy USA, we remain indirectly invested in one of the world's largest THC markets, providing us with long-term strategic optionality as the regulatory environment continues to evolve. So overall, this was a quarter of real progress. Our balance sheet is stronger, Canadian cannabis sales are growing, and the confidence of our team continues to build. Looking ahead, the business is well-positioned to unlock additional value through elevated cultivation, innovative brands, and disciplined execution. I'll now turn it over to Tom to walk through the financial results in more detail.
Thanks, Luc. I echo your sentiments and remain confident in the direction our business is heading. The third quarter reflects our continued focus on disciplined execution across the business, while sustaining cost savings and significantly improving our balance sheet. With our aggressive cost-saving actions taken to date, we have been able to identify and capture $29 million of annualized savings, far exceeding our initial expectations. This, coupled with the growth we are witnessing in the Canadian business, gives us the confidence that we can achieve our goal of positive adjusted EBITDA during fiscal 2027. Turning quickly to the balance sheet. We ended the quarter with our strongest net cash position since fiscal 2022 with $371 million of cash and short-term investments and a net cash position of $146 million. We further strengthened our balance sheet subsequent to the quarter end with the previously announced recapitalization, which enhanced our near-term available cash while extending our debt maturities to 2031. These actions reinforce our financial foundation as we continue to execute against our operating and strategic priorities while expanding our near-term financing flexibility, including greater discretion over the timing and use of our remaining ATM capacity. With this level of balance sheet strength and expected sustained improvements to our operations, I'm extremely encouraged as we close out the fiscal year. I will now review our detailed segment results, starting with global cannabis. Q3 cannabis net revenue was $52 million, up 4% compared to a year ago. This growth was led by Canada medical cannabis with revenue increasing 15% year-over-year to $23 million, marking another record quarter. This growth was driven by continued expansion in insured patient registrations and larger order sizes. Our medical team's focus on improving service levels, including faster fulfillment and reduced shipping times, continues to generate positive results. Canada adult-use cannabis revenue increased 8% year-over-year to $23 million, supported by growth in infused pre-rolls and our new All-In-One vapes from Tweed and Claybourne. In addition, disrupted retail operations in British Columbia reduced purchases by the province during the quarter, which created revenue headwinds not expected to recur in the fourth quarter. Turning to international cannabis. Sales increased 22% quarter-over-quarter, reflecting stabilization and a return to growth. As we retooled our supply chain, we saw encouraging signs of operational improvements as we exited the quarter. Cannabis gross margin was 25% in Q3 as compared to 28% in Q3 last year. The year-over-year decrease in gross margin percentage was primarily attributable to lower sales in international markets and a change in sales mix within the Canadian adult-use market. Turning to the performance of Storz & Bickel. Storz & Bickel net revenue was $23 million in Q3, an increase of 45% sequentially, driven by traditionally strong seasonal sales with Black Friday online sales increasing 16% year-over-year and the first full quarter of sales for the new VEAZY device, offset by softer demand in certain markets and tariff-related pressures. Storz & Bickel gross margins decreased to 37% in Q3 from 40% last year with tariff impacts and lower volumes providing gross margin headwinds. Moving to operating expenses. Excluding the impact of acquisition, divestiture, and other costs, which include litigation costs and recoveries from previously divested businesses, SG&A expense decreased 12% year-over-year. This improvement is the direct result of our ongoing cost savings initiatives, which remained a central focus for Canopy. These savings, combined with the performance of our Canadian cannabis business led to our narrowest adjusted EBITDA loss to date of $3 million. We remain focused on balancing cost discipline with maintaining the capabilities required to execute in our core markets. Free cash flow was an outflow of $19 million in Q3 fiscal 2026, down from an outflow of $28 million in the same period last year. The year-over-year decrease primarily reflects a reduction in the cash interest payments due to a reduction in our debt balances and decrease in working capital movements. As we move forward, our focus remains on delivering positive adjusted EBITDA in fiscal 2027, improving inventory turns and tighter capital allocation, all of which support sustainable free cash flow improvements. Looking ahead, in Canada cannabis, we expect continued strength in adult use driven by innovation, expanding distribution with key accounts and elevating our flower capabilities. In Canada medical, we remain focused on patient growth and service excellence which we expect to continue to drive growth in the medical channel. In international cannabis, our priority is operational stability and execution with sequential improvements expected in Q4 and into fiscal 2027, driven primarily by performance in our European markets. With this momentum, we expect to see improvements in our cannabis gross margins in Q4 and into fiscal 2027. At Storz & Bickel, VEAZY momentum and cost discipline remain key drivers as we navigate near-term macro and tariff headwinds. With Storz & Bickel's strongest quarter being Q3 traditionally, we can expect the sequential top line comparison in Q4 to be challenged. With the expected growth in top line revenue on improved gross margins as well as the cost saving initiatives executed today, we would expect Canopy to achieve positive adjusted EBITDA during fiscal year 2027. Furthermore, upon the expected closing of the MTL transaction, Canopy expects to consolidate MTL's results from the closing date onwards, which will contribute to net revenue, gross margin, and adjusted EBITDA improvements. While integration planning is already underway, our immediate focus post-close will be on ensuring operational continuity and beginning to capture the strategic and cost synergies we have previously outlined while also maintaining our disciplined approach to financial management. In closing, I want to underscore that our priorities across the business remain clear and unchanged: rigorous operational execution, disciplined capital allocation, and achieving positive adjusted EBITDA. With these three elements, we are positioning Canopy for sustainable long-term success.
Thank you, Tom. For me, the takeaway from this quarter is clear. The focus we've placed on fundamentals is working, and it's strengthening the foundation of our business. We have made real progress on the balance sheet, built momentum across our Canadian cannabis businesses, and took an important step forward with the proposed acquisition of MTL Cannabis. With that foundation in place, our focus now shifts to acceleration in Europe, expanding the reach of Storz & Bickel, and elevating cultivation, quality, and efficiency at scale across our platform. From my very first day, I believe that Canopy Growth has the potential to transform, refine its focus, improve its structure, and deliver on its promise of a sustainable and profitable cannabis company. With each quarter, we're demonstrating sustainable improvement, and I'm confident we're positioned to gain further momentum as we move into fiscal 2027. Thank you. Operator, we'll now take questions.
分析師問答
First question comes from Aaron Grey from Alliance Global Partners.
First for me, I just wanted to dig a bit more in terms of the international business and what to expect maybe for the next 12 to 18 months for growth opportunities. MTL had a small international business today, but it does seem their production capabilities could help you improve your international supply chain. So maybe any color in terms of how to think about the timing of that flowing through? And is there any additional capacity needed to ensure MTL's legacy domestic business continues to be serviced? And then additionally, in terms of the EU GMP at Smith Falls, how should we think about potential timing of that and that improving your international supply chain capabilities?
I hope you're doing well. Thank you for your question. There's a lot to discuss. Let's begin with flower. We've shown in the past that when we have flower available in Europe, our sales and distribution capabilities deliver results. Our primary focus is on ensuring we have the right supply of flower for Europe. The team has been working diligently in recent weeks and months to align the demand signals we're observing in Europe with our growth capabilities in North America, and this issue is largely resolved now. We're in a much better position to meet demand than we have been before. To provide a data point, during Q3, our sales team in Europe had only two strains available for an extended period. We anticipate that by early fiscal '27, they will be able to offer over a dozen different strains. We are confident in our ability to increase flower supply in that market, leveraging the unique capabilities Canopy has developed over the years. The Smith Falls facility is already EU GMP qualified, and we are pursuing an additional level of certification with all documentation progressing toward approval. Furthermore, we have a facility in Europe, specifically in Germany, that is capable of receiving, clearing, and distributing flower, and we are continuously making operational improvements there, which makes us optimistic. Regarding MTL's capacity expansion, we have engaged with a highly qualified team there, known for their exceptional growers. Plans are in place to enhance capacity, and we are also focused on our facilities at Canopy to improve yield, with several work streams making progress. Our confidence in achieving significant performance improvements in Europe next year is growing every week.
Appreciate the color and data points there. That was really helpful and thorough. Second question for me is maybe just touching on the expectations for the gross margin, both on the legacy business, on how you expect those to trend, particularly for cannabis, which has been volatile over the past few quarters, both on the up and downside? And then how best to think about layering on MTL, which has had a higher legacy gross margin profile?
Yes. Thanks, Aaron. I'll take that one. So as Luc said, we're excited about the acquisition of MTL and believe it really complements and enhances the existing business in Canada as well as abroad. With MTL's historical margin performance, which you're right, does exceed ours, we're targeting in the near term here, a blended gross margin of, say, mid- to high 30s. But I think there's still a lot of runway after that as we see the European business stabilizing and growing just given the high price points in the European market. So definitely, we expect the MTL transaction to be accretive to gross margin and as well as to our adjusted EBITDA.
The next question comes from Bill Kirk from ROTH Capital Partners.
Tom, when you said a positive adjusted EBITDA during 2027, does that mean for the full year? Or does that mean one of the quarters in the fiscal '27 will be positive? And do you expect positive numbers if you were to exclude the contribution from MTL?
Yes. So a couple of parts there. So as I said on the call, Bill, I am encouraged by the progress we continue to make to grow the business and course correct our cost structure. We continue to work towards achieving adjusted EBITDA positivity as soon as possible. We will face headwinds with the veteran changes, and that's a lot of the reason why you're seeing us take more aggressive cost-saving actions now. So I'll say we're trying to get there as quickly as we can, Bill, and we would expect to be there at some point during fiscal 2027.
Okay. And then for my second question, the indebtedness maturities are out to 2031. You're sitting on net cash. So would you expect the period, the last 5 quarters or so, that period of large equity issuance and dilution, would you expect that to be over?
Yes. So yes, we're pleased with the current balance sheet position we're in after completing the January recap with a lot of the cash we have on hand now, I would fully expect that does reduce our utilization at the ATM in the coming quarters, but we will preserve capacity for future strategic opportunities as and if they arise.
The next question comes from Pablo Zuanic at Zuanic & Associates.
Luc, can you comment in terms of the domestic medical business, there's this proposal in the budget to reduce the cap for veterans from $8 per gram to $6 per gram that could become effective by April 1? Where are we that? Is there room do you think that, that will be delayed or scratched?
Pablo, thank you for the question. This is a very important subject, and we want to make it clear that Canopy is really not in support of this reduction because it can potentially impact the level of care that veterans receive. So as you can imagine, we've channeled a lot of efforts to work with the authorities to see if this could be either delayed or the reduction may be minimized. So far, we have not been successful. So we're taking all the actions to maintain both the integrity of the quality of the care and service the veterans are receiving. And at the same time, we're taking all the actions to maintain the integrity of our margins. So as Tom said, we took additional actions to be even more stringent on our efficiencies on cost savings. We're able to find more cost savings. So we're doing everything we can to maintain the integrity of our margins. Tom, anything to add?
No, I think it definitely presents a headwind for us, but we're taking the actions now prior to the changes coming into effect to make sure we could preserve adjusted EBITDA performance to the full extent possible.
Right. And before I ask my follow-up, I mean, according to my math, the veteran part of the domestic medical business, it's almost about 2/3 of the market. Or am I wrong in that calculation?
You mean the total cannabis market on the medical side in Canada, Pablo?
Right. Yes. Would the veteran piece be about 2/3 of the total market roughly?
We can follow up with you. I analyze the market in a few ways. The adult-use market in Canada is nearly $5 billion, growing at 4% to 6% annually. The medical market ranges from $300 million to $400 million, and we can provide you with the exact figures later. Veterans constitute a significant portion of the medical market, but there are other large groups of insured and uninsured medical patients in Canada as well. The key point, Pablo, is that in the last quarter, we experienced 50% growth in this highly profitable market. MTL is also growing at double digits, according to their last reported results. Together, we will become the top player in this sector. We prioritize the veterans and all cannabis patients in Canada. We are committed to maintaining the integrity of our service, care, and margins. As we integrate with MTL, we will explore every possible synergy, benefiting from increased scale to uphold margin integrity and will provide more information later.
Next question comes from Brenna Cunnington at ATB Capital Markets.
So just looking back to the balance sheet here. So cash balance of roughly $376 million ending the quarter and roughly $425 million following the recapitalization, so quite the war chest that you're building up here. We know that some of the cash will be going towards the consideration for MTL. So kind of a two-pronged question here. So could you shed some light on roughly how much cash you're wanting to keep on hand and the top priorities for the excess cash? And then also, could you remind us of roughly how much spend will be needed right off the bat for MTL integration?
From a cash perspective, we aim to ensure we have enough flexibility and maintain adequate cash in case we identify opportunities in the market. I can't specify an exact figure, but this is a stronger position regarding cash levels than you might anticipate. For the MTL acquisition, we expect the cash outlay to be between $40 million and $50 million in Canadian dollars.
Okay. Perfect. And then just looking at Storz & Bickel, so good to see some of the improvements here. Looking ahead, and apologies if I missed this in the prepared remarks, but given the dynamics at play here, what can be done to help improve sales and make it sort of more stable going forward?
Thank you for the question. Storz & Bickel is an incredible brand with exceptional products. I highly recommend anyone who hasn't tried the device to give it a go. The brand currently has low awareness and trial rates, particularly in the U.S. Our strategy for driving growth and creating value is twofold. We aim to significantly increase market penetration and usage in the U.S., while also accelerating innovation. We see innovation in several ways, including expanding our price points. As we make our products more affordable, we anticipate a significant uptick in brand popularity. For example, the VEAZY, which is our entry-level device, is performing exceptionally well, and we plan to continue in this direction. Currently, we only offer devices designed for flower, but we can also branch out into devices that accommodate concentrates and distillates, which represent a large segment of the market where we are currently not participating. There are numerous opportunities for expanding growth and adding value to the brand.
Thank you. This concludes Canopy Growth's Third Quarter Fiscal 2026 Financial Results Conference Call. A replay of this conference call will be available until May 7, 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.