Curaleaf Aktie

Everyone, what's going on. Welcome into our latest TDR Trade to Black podcast. I'm your host Shadd Dales. Big podcast here today, as we know, Curaleaf trying to acquire Aurora Cannabis. We know how this has all unfolded in the last couple of weeks. This has gone public, and it's probably the first M&A deal if it gets done that we've seen in over 5 years.

So today, we're going to bring in CEO and Chairman, Boris Jordan. There's been 15 questions that have been pre-submitted by Aurora shareholders that he's going to address on record, but the whole goal here today is to give shareholders both from Curaleaf and Aurora, a better understanding as to where this deal sits in right now.

So Anthony and I will go back and forth with 15 questions. If you have any questions and let outline them in the comments section below, we're back and forth with Boris to give you guys a better idea if you're an Aurora shareholder or Curaleaf shareholder, again, a better understanding as to where this deal sits right now.

So with that, let's welcome in AV here on a Thursday morning, but good job putting this together. I'm sure a lot of people will be watching this live. And I'm sure a lot of people will be watching this later today once we post this. But long story short, this is going to give a good clear idea as to where things sit right now for shareholders in both companies.

Yes. I'm looking forward to this. It's clear, concise questions and direct from the horse's mouth with Boris, giving his complete perspective on where things sit and his vision for this deal.

Indeed. With that, let's welcome in the Chairman and CEO of Curaleaf, Boris Jordan, back to the podcast. Good to see you. How are you?

Good to be here, guys, and thanks for hosting this. We really appreciate it.

Well, I appreciate you taking the time and giving us the, I guess, support and trust to put this all together. So on behalf of Anthony and I, we appreciate you and the team doing this. But before we get into questions, are there any opening remarks that you'd like to address Boris?

Yes. I have an opening statement, which I'd like to go through, and then we can go into the Q&A. And I wanted to make sure that I want everyone to understand there are prepared questions that were sent in advance and I'm happy to answer.

But I also want to make sure that anyone who has a question can ask it now, no matter how difficult it is because I don't want there to be any feeling out there that I'm hiding from difficult issues or questions. I want to be able to answer -- as difficult as they may be, I want to be able to answer them.

Well said. Okay. Go ahead.

Thanks, guys. Again, hi, everyone, and thank you for joining us today. And I'd like to spend a few minutes talking about 3 subjects: one, Curaleaf and our offer. And that's important because 80% of our offer is Curaleaf stock. And so there may be people that don't know our company, and so I'd like to talk about that a little bit. And then the offering is a little bit complex, so I'd like to go through what the offering is. I'd like to also talk a little bit about what we see in Aurora, and I'd like to see -- tell people what our vision is for these 2 companies being together.

And as shareholders, those that are on here, whether you're a Curaleaf shareholder or an Aurora shareholder, you deserve 3 things. You deserve results, value, and a clear vision for the future of this investment. And we believe our offer delivers all 3 of those things. So here's what I'd like to do. Let's talk about Curaleaf for a second. I've spent a decade building Curaleaf, and I've invested hundreds of millions of dollars of my own capital into this company. And I think that that's one of the big differentiators of Curaleaf against a lot of other companies, in that I didn't get my stock for free.

I didn't, wasn't a founder that got the stock. I actually bought into a company called PalliaTech and ended up starting to invest and working with the management team to build the company. And so I have a tremendous amount of skin in the game alongside all the other investors that have invested in Curaleaf alongside of me. We are the largest cannabis company in the world with operations in 15 states in the U.S. and 17 countries globally.

Last quarter alone, we did $340 million in revenue and $70 million in adjusted EBITDA. Through the first half of the year, Curaleaf generated net income of $82 million, $50 million of operating cash flow, and $17 million of free cash flow. Given the seasonality of our business, we would expect our cash flows to accelerate in the second half of the year as they do every year.

Last year, we generated over $150 million of operating cash and $94 million in free cash flow. That means the strength of our operations funded by our obligations and growth investments with cash left over at the end of the year. This year, analysts project Curaleaf will generate $1.45 billion in sales, up 15% from last year, and $284 million in adjusted EBITDA. We have some of the most well-known cannabis brands, both in the U.S. and in Europe. In the U.S., Select is the #1 vape brand across our markets, and Curaleaf is the most recognized global brand in cannabis, and that has a lot of value to it. We have one of the strongest balance sheets in the industry.

We have $107 million in cash, and debt is just 2.3x adjusted EBITDA, a healthy, manageable level. Last quarter, our international business grew 26% year-over-year, with real momentum in Germany, the U.K., and we're very excited about expanding into 3 new countries in the next few months: Spain, France, and Turkey. I'm actually in Turkey right now speaking from here where we're launching our new facility, with a combined population of 210 million people between those 3 markets.

We also have multiple growth catalysts ahead in the U.S. and beyond. Obviously, 1 of them being the Schedule III, I'm not going to spend a lot of time on that, but obviously, that's a major, major change in the U.S. market. The medical one has already happened.

We expect the adult-use one to happen literally imminently. It could be today, it could be tomorrow, it could be next week. On adult-use rescheduling, we expect to hear the update, as I said, in the next couple of weeks. We also believe that the 280E guidance that is going to come out is likely to be retroactive also for several years going back, which should give a lot of clarity on balance sheets, not only for Curaleaf but a lot of other cannabis companies in the U.S.

And then obviously, the hemp legislation that we expect to expire on December 11 is also going to help a lot of our businesses come back to organic growth, as hemp was the largest drag on U.S. cannabis in the United States. So when you look at Curaleaf, you're looking at a profitable, cash-generative global operator with a clear vision, a strategy to drive long-term sustainable growth supported by many regulatory and industry catalysts.

Curaleaf's offer now to Aurora shareholders. Our offer implied $4 a share of value based on a combination of stock and cash when we first announced the deal. Let me break it down in plain English. For every 100 Aurora shares you own, you would receive USD 75 in cash and approximately 35 Curaleaf shares. Before our offer, those same 100 Aurora shares were worth approximately $276. We offered approximately $400 when we made our bid. That is a 45% premium, and you don't simply cash out and walk away. You receive Curaleaf shares so you continue to participate in Aurora's assets and the future of the leading global cannabis company in the world.

And as of last night's close, those 100 shares are now worth $421, now representing a 51% premium to Aurora's price before our bid announcement, which is a result of the fact that Curaleaf shares have outperformed, having increased 7% since we made the bid. And when you're accounting for Aurora's cash on its balance sheet, our premium is 110% and represents one of the highest premiums in total Canadian M&A in the last 10 years. And that means all M&A in every industry. This is one of the highest premiums ever paid in Canadian M&A. I'll be frank.

The alternative for Aurora shareholders is reasonably bleak. A company getting smaller and less profitable by the day, a 6-year turnaround that is still not finished, continued dilution without a clear vision, and a share price that has declined 97% under its current leadership. That's not a turnaround. That's 6 years of shareholders waiting while management collects their grant -- giant industry-leading paychecks.

I have heard directly from many of you. More than anything, you want to know whether there is credible plan for a credible management team to create value here. To answer that question, let's start with the Aurora -- what is Aurora is actually today. We all know that Aurora has some valuable assets. In particular, its EU-GMP-certified facilities and its leadership positions in an international medical market, Poland. That said, they have not been able to create a sustainable business, but we believe those assets are underutilized. Aurora's facilities currently produce approximately 50 tons of cannabis annually. On a comparable square footage basis, we believe we can double that output just as we have done in our facilities in the United States. Further proof that Aurora has been operating inefficiently is that it has had to buy in cannabis from third-party operators despite having plenty of its own capacity available to meet demand.

And we have heard directly from people who have worked in and around these operations that execution has been a real challenge. We have a diversified platform to offer ACB shareholders. So this isn't a story about bad assets. It's a story about assets that haven't been able to perform to their full potential due to mismanagement.

What is our vision for the combined business? From the start, our vision has been to create the absolute dominant -- wellness-focused cannabis company in the world. Our international focus has been on providing high-quality medical cannabis products to patients in search for natural medicines. In fact, we have numerous partnerships in the U.S. and Europe with university hospitals focused on research and medical and wellness cannabis product development.

We invest more capital in R&D than any other cannabis company in the world. With Aurora, we can extend the lead we have today by creating an unmatched supply chain and leveraging our broad distribution network through which we sell excellent products and brands, all of which would generate approximately $500 million in international sales. Using Curaleaf genetics and our grow processes, coupled with Aurora's indoor cultivation assets, will create an unparalleled global player. We're very excited about bringing these 2 businesses together.

This is the reason why we traded at a premium to the group and always have. It's because investors have confidence in our scale, strategy, vision, and execution. Why this combination works. When I first looked at the opportunity with Aurora, I immediately thought strategically it fits like a glove.

Together, we would create the absolute unquestionable leader in cannabis outside the U.S. On a combined basis, looking at trailing 12-month numbers, we're talking more than $1.5 billion in revenue with roughly $0.5 billion outside the U.S., nearly $350 million in adjusted EBITDA, exposure to multiple U.S. regulatory and industry growth catalysts, and at least $40 million in expected annual cost savings.

To Aurora employees, I want to emphasize that we see this very much as a growth story, not a cost-cutting story. And we'd be honored to have you all as part of our future. We plan to hold a separate session in the coming weeks for all of you, together with our CEO of International, Juan Martinez, to speak to you directly and answer your questions.

Setting the record straight before we move into questions. Now I know there's been a lot of noise over the last few weeks. In situations like this, there's a lot of back and forth between both sides, press releases after press releases.

Pretty soon, everyone loses sight of the question that actually matters. What creates the most value for shareholders? That is what we laid out in the facts in our shareholder communication. We posted online this week and on our microsite. You should also be receiving a hard copy in the mail. On those fax is that Aurora's own numbers point to a declining revenue, declining profitability, negative operating cash flow, and a business that management itself expects will become smaller and less profitable. These aren't our words, it's management's. And Aurora's business update yesterday doesn't change that picture. Sequential growth off of a 20% decline last quarter is not a turnaround. It's just an easy comparison.

Yet management still sold stock in the past few months through its ATM program, so their actions suggest a continued lack of confidence in the company's future. And it's worth noting that they have reaffirmed an outlook that is still negative. At that point, Aurora's words and actions do not match. Even as Aurora says our offer is too low, management is comfortable with constantly selling stock at prices significantly below our offer, diluting your shares and making them less valuable. Think about that for a second. Management was willing to sell shares as low as $2.60 per share in July of this year, a 35% discount to our offer made 3 weeks later.

But now they are telling you that $4 is not enough. And $4.21, based on Curaleaf's share price last night, how does that make any sense? That's why we asked the Alberta Securities and Exchange Commission to halt and remedy Aurora share issuances while you consider our offer. You deserve to make this decision before management sells off very -- the very value that you're claiming to protect. In Aurora's own words issued in yesterday's press release, management appears ready to make more investments in Europe. If they came to the table to speak to us, they wouldn't need to waste shareholders' money. We already have these assets they are seeking to buy. In the U.K., Curaleaf is the #1 player with almost a 50% share.

The recent acquisition they made is money wasted since we already have the pieces in place: cultivation, processing, clinic, and pharmacy. Most importantly, if management generally believe $4 undervalues the company, and they were truly interested in getting more value for shareholders, they would talk to us. From day 1, we've been ready to sit down with Aurora's Board and discuss terms. Aurora would not sign an NDA, they have not had a single counteroffer. They have not engaged in a single constructive discussion with us.

They have not sent us a single counteroffer, not one. We're going into Q&A in a second, so I'll leave you with a couple of closing thoughts. If you can't tell already, I'm passionate about this industry. I'm passionate about this company, and I'm passionate about the vision we have for the future. You'll also see that I don't shy away from tough questions. So ask them, challenge us. If there's something that we need to answer today, we will. If there's something we can't, we'll make sure we do it later.

And at the end of the day, this is your investment, your decision, your future. With that, we're going into Q&A. Some are presubmitted, some are coming in. Again, I want to thank the TDR guys, both Shadd and Anthony, for hosting this session.

That's great. Great opening statement. Anthony, let's go into the questions. Let's begin with question #1. Do you want me to bring it up? Okay. So I'll bring it up. So for Curaleaf shareholders, what makes Aurora the highest return use of capital versus organic growth, debt reduction, buybacks, or any -- or another opportunity?

Listen, I firmly believe that the #1 thing a company has to do is it's got to invest in growth. It's got to continue to grow. It's got to continue to dominate, and that's what this investment is about. We are investing in growth. We're investing in the supply chain, and we're investing in the fastest-growing market right now in cannabis by making this investment. We are not worried at all about debt. We're very comfortable where our debt is. We are paying down some of our debt, and we have plenty of cash to do that. We pay down about $3 million of debt every single month right now. So we are paying down debt. But growth for us is more important because growth brings cash, and then cash, then you can do other things with. You can either invest in your business, you can buy back shares, you could play down [ growth ].

And Curaleaf is doing all 3, just to make sure. We're investing in growth with this deal, we are paying down debt, and we have been buying back shares. So we're doing all 3 of those things. But in that priority that we think is the most important. Growth is first.

Anthony, go ahead on question #2.

This is Aurora's strongest argument is the value of its international medical business. What can Curaleaf do with that platform that makes it more valuable inside Curaleaf than as a stand-alone Aurora asset?

Listen, I want to make something very clear. First of all, I believe this industry needs to consolidate. This is a scale business, right? Whether you're medical or you're consumer products, recreational cannabis, these are scale businesses. A lot of these small companies just can't survive at their scale today. If you look at just even Aurora's numbers that they've just put up in their last quarter, they did a $212 million in medical revenue, USD 219 million total. They had gross profit of $120 million, but their OpEx was $128 million. So they lost $8 million just there. This business, Curaleaf has invested $500 million, real dollars in an international platform. They don't have the kind of capital. There isn't the capital available today in order to be able to do that.

So it makes sense for them to consolidate into a larger player and give their shareholders an opportunity to participate in the upside on that deal. So there isn't a real business there, right? They jumped from adult-use to not adult-use, medical to not medical. They've picked certain segments that are getting cut. We have a distinctive strategy and we also have a very diversified portfolio. And that's a major important thing for shareholders of Aurora, right? They don't have a diversified. We can lean on our U.S. business, which is a $1.2 billion business today, we can lean on our international business. We're opening up new markets. It's a smart investment for them to do it.

So I think when -- yes you look at this, you've been pretty clear that the offer represents full and fair value. But what are the, I guess, the 2 to 3 assumptions that matter most to that valuation? And where do you think Aurora's Board sees the economics differently, because we've learned that they do see this differently so far?

Well, listen, I don't -- can't tell you what the Aurora Board thinks because almost every shareholder I've spoken to -- and by the way, I've spoken to senior people within Aurora that don't want their management to know, and they have said that they believe that over 50% of the shareholder base is supportive and the majority of the employees have supported this transaction. And so I know by saying that, probably Aurora will come out and say that's not true.

But that is true. We're talking to employees. We're talking to shareholders all the time. And as I said, the value is in the global platform that Curaleaf has built. And you are merging into -- you're being bought in and merging and merging because you're getting 80% of Curaleaf stock. And that was done on purpose, guys.

It was -- listen, we could have put a cash bid together. We had plenty of banks that would finance a cash bid for Curaleaf on this deal. But we did this because we wanted Aurora shareholders to participate in the catalysts that we're about to have in the U.S. And if they move fast, I know there's another question about the deal structure. But if they move fast, they will understand one clear thing that they will get the Curaleaf shares faster and they'll be able to participate in that upside on the U.S. catalyst side, much, much faster.

But by dragging this thing out for the 110 statutory days, many people don't know this. In Canada, you could close this deal in 35 days if there's an agreement on both sides. But by dragging this thing out, they are hurting their shareholders of not being able to participate in the upside in merging this business into a company like Curaleaf.

Yes, I've been scratching my head saying the same thing with the upside from a rescheduling catalyst, like why would you not want to get this done in the sum of the parts game versus the stand-alone, especially in due time versus dragging this out.

And a 51% premium as of yesterday, correct?

That's right. As of yesterday's close, it's a 51% premium. And obviously, as Curaleaf grows because of the [ $5 cap ] their premium will grow. So they -- this is a very attractive deal. And I do not understand why -- I mean, frankly, I'm not in the old days, remember the 1980s where these guys used to raid the companies, but it almost feels like that, like you have -- like you remember the movie Wall Street, where these guys are sitting up there and the guy is asking, what the hell are you guys doing, right?

It almost feels like that, guys. Yes, you're getting good salaries, but look at their -- they just upped -- when we looked at their recent proxy, when we looked at their -- the way they have structured their buyouts, they all get these huge golden parachute packages.

Let me tell you something about Curaleaf. I don't get any goddamn f*** package if my company gets bought, right? I get nothing. Because I wouldn't even think of going to my Board with that. My job is to build the company for growth. My job is not to sit there and try to flip it and make money for myself. My job is to make money for my shareholders, of which I'm the biggest one.

So let me go off script for the investors of Aurora that say, "Look, if you want us, offer us more. Right now, it's not enough." What's your response to that?

Come and talk to me. I've made an offer, make a counter. They've made no counter offer. They've had no conversations...

Did you anticipate -- did you anticipate that they would -- I don't want to say drag their feet, but just refuse to even give you a counter at this point in time with the process?

I'm going to quote someone. I'm not going to name them. But I was told this by a certain senior manager of the company. "All things being equal, Boris, I'd like to run this company for another 5 years." Let me tell you something, if there's somebody that's better to run my company, please, tomorrow. I'm a shareholder. My first thing is I want to make money. That's how I look at things, right? I want to make as much money on this investment as I possibly can.

And so I am not holding on to my seat as a CEO. It's an irrelevant f*** rounding error, as far as I'm concerned. I want to make big dollars, big multiples on my investment in this company. So if there's somebody better to run this company, let them come in and run it. But I personally think these guys are -- I hate saying this, but they're trying to hold on to their jobs.

There is no reason for Aurora to be independent. It has no chance to compete against global players like Curaleaf in this environment. And if it's not going to be them, we're going to do something with somebody else and their shareholders are going to lose because I don't believe there's a white knight out there that has our balance sheet, our positioning, our distribution, our new countries that we're going into right now to make this investment as efficient as it's going to be with Curaleaf versus somebody else.

So sure, there might be somebody that they drag out, but there's not going to be anyone that where it fits as good as into Curaleaf, and that has the same catalysts and upside that Curaleaf does over the next 3 to 6 months where these people can make -- the Aurora shareholders can make, a lot of money.

Well said.

Next question is...

Do we want to go question #4? I think he actually touched on the significant debt portion. We can talk about that or we can move to question #5, if you want, Anthony?

Yes. I think, Boris, you can give a little bit more color on this, is Aurora's claim, Curaleaf carries significant debt. How do you manage that without diluting Curaleaf shareholders? I mean you said you're repaying on a monthly basis right now, correct, versus shoring up that debt on the balance sheet?

Listen, our debt is at 2.3x EBITDA, very, very manageable from our perspective. We're generating a tremendous amount of cash. It is not something I'm worried about. I keep seeing this on Twitter and stuff like that, people just don't understand businesses, right? One of the reasons Curaleaf carries slightly more debt than some of our competitors because I put $500 million into building this international franchise.

There's your number, right? And so -- and if you look at our leases, those leases are running off over the next 5 to 6 years, right in time for when I think you're going to get interstate commerce coming into the play. Curaleaf is a well-planned company. Nothing is by accident. Have we made mistakes? Absolutely, absolutely. We've made a mistake. We've exited markets. Everyone is going to make mistakes when you have such a fast-growing business. But the fact is we have well planned what we're doing. We know what we're doing. We have a strong balance sheet.

And frankly, we also have strong shareholders, right? This isn't my only business, right? If there was actually a problem, Curaleaf would not have a problem. It's got me. Not only as the CEO is committed, but also somebody who's got capital. But that notice, I have not had to put every capital raise this company has done, whether it's debt or equity, every single one, I've been a big investor. So I have put my money where my mouth is. I believe in this business, and shareholders should be comfortable with that because they're looking at someone that's got hundreds of millions of dollars invested in Curaleaf.

Yes. But I think it's also important to outline too that a lot of mistakes that U.S. companies have made is like mistakes that are beyond their control, and that's from a regulatory front as well. Timing, things get delayed, I get it, and this is why it's been long drawn out. But you also point to that the time has come for change, and it looks like it's here. So you have that upside potential as to what we just outlined.

And everybody knows from Wall Street to Bay Street in Canada right now that the opportunity that we're looking at is the U.S. opportunity that then segues into international as well, which is the future in a lot of ways. But continuing on, the next question is, why does the offer include an exchange cap? Explain what that is and why structure it this way?

Great question and really important to understand. Because normally, I wouldn't do this. If it was the U.S. and I had a 30-day period where I can close a deal, I would never put a cap on it. Surely, we are in the middle of a process that could be game-changing for the U.S. cannabis companies, right. We are going to be potentially significantly revalued on the back of these regulatory changes that are happening.

And frankly, they're happening now. So -- and I have to -- under Canadian rules, I have to keep this offer open for 110 days. So what happens if Curaleaf revalues 2x, 3x during that period of time? I end up paying like $900 million for Aurora. That's just insane. It doesn't make any sense. So I had to cap it. But with that, I've offered them another $1.

And the fact is it is likely that they're going to get that $1 because Curaleaf is appreciating right now. And so Curaleaf has to get the $17 and they get their $5 and we're trading, I think, at $14 or something like that -- $14 something or something like that, right? So it is -- they're going -- it is likely that they're going to get the $5, but the cap is there to protect the Curaleaf shareholder.

Okay. Well said. Anthony, go ahead.

For a shareholder who just wants liquidity, why tender to Curaleaf instead of just selling Aurora shares on the open market today?

Listen, it's a free world. That's what I love about capital markets. You want to sell and take the 40% premium, I'm super happy for you. You've made your money, you've gotten out. But a lot of shareholders in Aurora, unfortunately, have been in the stock for a long time, right? They've been in it -- let's be honest, guys, the stock traded at over $1,000 at a certain point in time, right?

So there's a lot of people that -- I think the term is called bag holders that would love to make their money back. That's another reason why I offered stock as an alternative because people then get to still participate in the upside to make capital back in a much bigger, much more diversified company than they're in today.

And so that's one of the reasons that I structured the deal the way it is. And I think it's a well-structured deal for people. And again, if shareholders put pressure on the Board and on the company and they write them, we can get this deal done in 30 days. I think it force these guys to the table.

This next one is a good question, and it's from an actual Aurora shareholder who watches the show. If Aurora can't compete, as you've said, how does that track record with -- how does that track with leading positions in Canada, Germany, Poland, Australia and New Zealand? They have no debt, substantial cash, EU GMP assets and its reaffirmed growth. And I don't think they are a leading position in Canada as it comes to that...

They're not leading anywhere except Poland, let's be completely honest. And Poland because they got there early and good for them. Congratulations. I always give people credit where credit is due. They are a strong player in Poland, but -- because they got there early and they built a good business there, right? So good for them. But together with our business, that will be the absolute dominating business in Poland.

And the other thing I will tell you, though, about the -- and none of the other markets they are dominating or leaders in. They're just not. They're not even on the radar screen in those markets, except Australia, where their business is declining every quarter substantially, like substantially. So -- and it's been a major drag on their business.

But I just want to make a clear point that by combining that into our business, they are going to be able to do substantially better than they're doing today because we working together are going to win. They have a 50% SG&A, over 50% guys to our 29% -- 27%, sorry, in our international business. U.S. is 29%, but international business is 27%.

So -- and one of the reasons their SG&A is so high is that their marketing spend is $65 million on a business that generates $212 million, whatever it was, I said, $65 million in marketing costs. Curaleaf, which is a $1.45 billion business, runs like a $22 million, $25 million marketing budget. I mean, give me a break. So are they really selling their products in these countries? Or are they basically pushing their product in the market?

And how much are they undervaluing your distribution, how it can accelerate their revenue if this is -- if this deal is done, pairing their cultivation with your distribution in the EU on a go-forward basis that I think they're not recognizing?

I don't think they understand what Curaleaf has because they've never talked to us. I don't think they understand the power of our business in Europe. We are the global leader in all those markets, except for Australia. We're a small player in Australia, but there's a reason for that. Australia, like California right now, is in a very difficult place where the plumbing is all wrong, and it's hard to make -- almost impossible to make money.

So I'm not going to go and put real dollars, substantial dollars in a business that's going to lose me money. I'm focusing on those markets where I can make money right now, right? I have a small presence there to make sure that if the situation changes, I can quickly ratchet up. But I don't invest in markets where we're not going to be able to make money. So that's our focus right now is invest in those markets that make money. And by the way, [ Turkey ], France, Spain, all of those markets are substantial.

Now they have a presence in France. But working together with us and our partner, we're about to announce a partnership with one of the major pharmaceuticals globally in that market, that will be a huge win for both companies. Again, if they sat down and talk to us, any rational being in the investment world would say, Holy**, this is a match made in heaven. Let's do it. Let's take the stock and let's ride this thing together. But we're not having that contact.

Yes. Retail investors, they get emotional with certain stocks, they get attached to them and fixated on it, and that's the reality in today's world. More so, I think, now than we've ever seen before. But saying that, if you are speaking to them, next question, is this Curaleaf's best and final offer or could terms change as the process continues?

We are very comfortable with the offer we've made. We received no counter. We have no reason -- we don't see a white knight. We have no reason to raise our bid. And even at this bid price where we are now, these shareholders make a lot of money. They get the upside -- again, a lot of people don't realize. They are swapping Aurora shares for 80% of their -- 80% of their Aurora shares for Curaleaf shares. That's what gives them the upside in this deal above the 45% we've already given.

And by the way, I want to make it clear again, we are paying one of the highest multiples ever paid in Canada in an M&A deal. People don't seem to realize that. They're just emotional, as you said, Shadd, because they hold the shares. The one thing I want to teach something that -- I worked a lot with George Soros. I can tell you right now, one thing he said to me, Boris, don't get emotional about your losses, okay? The losses are there, then you got to take them, and you got to move on.

Sitting there and saying, I paid $15, and therefore, you need to pay me $15 a share. That's just hogwash. I mean, Curaleaf traded $23. My stake in Curaleaf was worth $4.5 billion at that point in time. Do I get emotional about the fact, yes, I was stupid not to sell? But the fact is I took it when I am -- I stepped in as the CEO and I said, I'm going to fix everything, and I'm going to make it worth $4.5 billion again.

That's where I am. And that's what leads me -- I'm giving the opportunity to step into Curaleaf alongside me that a person who's got a tremendous amount invested that is going to work day and night even at my crazy 60 years of age because I believe in what I'm doing.

Yes. Acceptance is clarity, is it not, gets you into the action mode, is it not?

It does. It does.

Yes.

It's a good way to put it.

Yes. Anthony, go ahead.

You spent weeks calling Aurora's management ineffective. Isn't it little rich to now be fighting this hard to acquire the company they've been running?

Listen, management and the company are 2 separate freaking things, right? And listen, I lived -- I had a nice life in Boca Raton, Florida, okay? I'm now living in fuc***g Stamford, Connecticut, okay? I'm in my office every day, okay? Their CEO lives in, I think, North Carolina and their company is based in Toronto or Vancouver or something like that. So guys, I am committed, I am working hard.

That company has -- that company's assets are better with Curaleaf than they are with their current management. I think I've made that point. Their assets will perform at a double the rate they are today. And one of the other questions, I don't know if it's here, but I was asked this morning is, for us, if you're getting all these synergies, why are you not sharing those synergies in this bid?

Well, first of all, I am, I'm paying a 45% premium to the stock. But second of all, the synergies are not cost synergies where I'm going to cut out their employees. That's not the point. I actually need their people. The business is growing.

The synergies are in my know-how, things that we have built over 10 years at Curaleaf, where we're able to, for instance, take their facilities, the ones they have today, and double the capacity of them because of our know-how. The genetics that we invested in that to grow in those facilities is much better than they would grow somewhere else.

These are things that we have developed and invested hard dollars in. That's where the synergies are coming from. Are there going to be some cost synergies? Sure, but those synergies are a minuscule part of the $40 million. Most of the $40 million comes from Curaleaf know-how that's going to make those facilities and those businesses perform better.

Something important to discuss, too, and I want to segue into the next question. How do you view the possibility of a competing bidder? What, I guess, differentiates your offer from any other alternative that may emerge here in the future, if possible?

Well, first of all, to make this bid, you've got to have the international footprint that we have. Unless you want to be like, for instance, I look at my competitors in the U.S., are they going to go in and buy this thing and then have to put in another $0.5 billion into building the distribution that I built? No. They'd rather put that, and rightfully so.

They're smart guys. They'd rather put it into Texas, Virginia, Georgia, the U.S. markets that are coming online, as will I as well in addition to what I'm doing. But I really have the sunk distribution business. I had the foresight to go do it. I operated in Europe for 30 years. I built one of the biggest data center companies and one of the biggest insurance companies there as an entrepreneur. I know the landscape.

I know how to function in that market. And so it was right for me to make the decision to go into that market and build this business. It was right for Curaleaf. It's not right for everybody. Will those guys come eventually? They will. They'll probably do it through acquisitions of bigger platforms.

But this is not that kind of platform. This is mainly a cultivation business. It's not a distribution. They just spent $2.5 million buying some rinky-dink license company in the U.K., which will take 10 years to build out to what we have in the U.K. We have to spend $100 million to do it.

I think the thing you're pointing out here, and I'm learning too is understand what you're invested in, right?

You got to know where you stand. And it's what I said to an investor who talked to me today, going back to that line from the Gladiator, right, in the beginning, where the officer is talking to the general and he says to them, as they're about to go to battle with the Germanians and the Romans and he says -- the Roman say, he looks at me, some people don't understand that they've been beat, right?

Guys, there are companies that need to be consolidated into the big businesses. It's not that they've had bad businesses, although Aurora, let's be honest, has spent billions of dollars over the years, raising money and restructuring and changing strategy and doing that. And let's be honest, it's a $200 million business now, right? So guys, it belongs, they have a good asset. While it's still good, get your shareholders paid by merging it into a superior player.

You said this back in June in Chicago that there's too many companies and there's going to be a lot of M&A, but we all need to put our egos aside. I think this is the challenging part that we're in now is that, yes, some business deals do make sense, but how do you make that happen? Because, yes, there's a lot of personalities at play.

And this is kind of a demonstration as to what kind of new era that we're in, in this particular space right now. Granted, we do want to have them on, and we want to hear their side of the story as well. But at the end of the day, I think it is smart that you want transparency, then make yourself available and let's talk about some of the issues. So good for you to make the first step in a lot of this stuff.

So Shadd, it's ego and it's greed. And one of my mentors...

Good point.

30 years ago said to me, Boris, remember one thing, skinny pigs get fat, fat pigs get slaughtered.

Good point.

Very accurate. I guess, Boris, how does Curaleaf view the possibility of a competing bidder...

Yes, we asked that one. Yes.

Aurora has raised concerns with regulators about Curaleaf's offer. Can you address those and whether they're likely to affect the outcome?

No. I mean the concerns were like we put the wrong time of day when the tender ends and so we wrote 12, it's got to be like 5:00. So we fixed it. We went to 5:00, guys. There there's nothing there that's real. And we've done everything we've got to do. And obviously, we are going to follow all the rules and regulations of this deal. We're not going to violate any of it because we understand that that's the ability for entrenched management to try and scuttle a deal. We're not going to make that mistake.

Yes. Question in the comment section. I'm going to ask this, and I think you've already answered this in a lot of ways, but it just -- I think it's a reminder for a lot of shareholders of Aurora. They said, Boris, you said Aurora sold stock as low as $2.60 in July, that's 35% under your $4 offer.

If $4 is too cheap, why was Aurora Management selling under the bid? And again, it's a very important question that people need to be reminded of. Again, I will say, understand the company that you're in and what you're investing in. And that is a question that if we get Aurora management on, that's one of the first questions that we have to ask. So anyway...

But also the thing I don't get is forget about even the price, although that's really weird. But the real thing is when you have $145 million of cash in your balance sheet, why are you doing an at-the-market deal? Like I mean, why? And the other thing I would tell you is I don't know of any single U.S. MSO that's done that, right?

We manage our businesses to where we can have cash flow so we can pay our expenses, our bills, our debt without having to do that. And these ATM programs are really bad from a shareholder perspective because it's just -- it's an uncontrollable dilution of the company that happens all the time. And I don't get it. I would never have one of these programs at Curaleaf. I'm telling you right now.

Yes. That's been the most perplexing part of this entire thing to me, at least, knowing what I know about capital markets, the fact that they have $150 million in the bank, and they have an active ATM that's raising $2 million to $3 million in increments. It makes zero sense. And I've reached out to Miguel. He has an open invite to come on the show, and that would be one of the things that I would be most curious to hear his thoughts on is strategically why that is going on.

Why do companies do that? Any idea?

Well, you do it to raise cash, but they don't need to raise cash.

Well, that's my point. In this particular case, why would companies do that? And I guess, tough to answer.

Yes. I -- listen, it's beyond my comprehension. Generally, I don't like that structure of capital raising. I don't think it's the best way to raise capital. I think it creates all sorts of bad incentives for management, and it's untransparent to shareholders in many ways.

So I would never -- just like I have no warrants, I've never done anything like I'm a purist in that there's equity and there's debt. And that's the way I like to manage my business. And it's very transparent that my capital structure is as simple as you can possibly imagine. There's equity and there's debt and there's none under these derivative instruments or anything like that.

Yes. Another comment, why would ACB sell before the biggest catalyst in history? All stocks prices are suppressed right now. Fair point.

That's a terrible point because they don't participate in that. Even if they get a daily -- a 1-day bounce, it's going to come right back, right? I mean Aurora has no U.S. exposure. They have -- they don't have any of the benefits that we're getting from the rescheduling in the U.S. And that's another issue, right, that's very important. Somebody could turn around and say, Boris, but your stock is down 70% from its highs and they're down at 90%.

You're also a failure because your stock is 70%. And I've gotten DMs like that. Well, the fact is, is that the reason my stock is down is completely different than the reason their stock is down. They already trade on a major exchange. They have access to any capital that they want. They have banks that service them like BMO and others that will give them loans and stuff like that.

They have markets that are completely legal, right? We come from -- we're literally like freaking -- we come from a market where nobody likes us. The regulators don't like us. We're federally illegal. Our capital costs are high. We trade on third rate exchanges, all of that. And in that environment, I built a $1.5 billion business, well, revenue or market cap, call it, $2.5 billion, $3 billion, whatever it is, I don't want to check it every day.

Whereas they function in the most -- I mean the amount of capital that was thrown in Aurora over the last 10 years, it's literally billions and now they have a $200 million business for that. And it's the same period of time; I built an enormous company. I mean, here to give you a comparison. When I took Curaleaf public at a $4 billion pre-money valuation, we were doing $70 million to put things into perspective of revenue.

Today, we're doing $1.45 billion in revenue, and I traded at $2.6 billion, $2.7 billion valuation, right? So I'm the exact opposite of their situation. I've actually built a huge quality business, but I haven't been able to get the valuation because of the restrictions on investment into our sector right now in the U.S. Whereas they have no restrictions and they have -- actually, their business and their market cap have collapsed. Now explain that to me.

Yes. Fair point. Getting more comments coming in, but I think the reality is, as you said before, we got a lot of long-term shareholders involved with this, and they just want more. But at the same time, too, and I think it segues into our question again, given the announced synergies of at least USD 40 million, should Aurora shareholders not receive more than USD 4? You've mentioned this before, but I think people need to be reminded again as to what.

Again, the synergies come from our know-how. So is NVIDIA going to give their -- they're going to give their special chips to a Chinese company and then also pay them for it? No. I'm not going to give my know-how and then pay for it.

Correct.

Absolutely not. The synergies are coming from my know-how and my R&D and all the work that I put in, all the investment I made into my business. So I've given a 45% premium. This stock was going down every day until we showed up. And by the way, guys, and they're guiding lower. They're guiding lower. Their freaking gfuidance is lower, not up. Whereas Curaleaf in the last 4 quarters has beaten and raised every single quarter. So how do you compare those 2 things?

Fair points. Number 11, go ahead, Anthony.

How do you respond to Aurora shareholders who argue that if they wanted exposure to Curaleaf, they already own Curaleaf.

Great. Love to have them. Maybe they want some more. Listen, I think that -- let's be completely honest about what's going on right now. There are over 350,000, as I understand, Aurora shareholders at the time I announced this deal. I can tell you right now that already most of the -- a lot of those shareholders have sold. In the last 4 or 5 days, I've been contacted by numerous funds that have said, we've accumulated 5%, 2.5%, 5%, 2.5%. I think it's almost 20%, 25% now. By the time this deal -- 100% of the float has turned over since we announced the deal.

So the retail presence in this deal by the time this deal comes to tender is not going to be that high. It's going to be -- and I'm hoping those institutions are going to go to the shareholders and say, sit down with Boris and have a conversation. Have a conversation, guys. That's our problem. What am I stupid? I'm going to compete against myself? I'm going to go out and raise the price? What am I? I'm not an idiot. And I hope my shareholders -- they understand that I'm a good steward of capital. I'm not going to do something stupid.

Conversations need to be had, long overdue. Let's switch our attention now up north. What do you intend to do with your business in Canada? Will customers still get medicine from you there? Are prices going up, your response?

So listen, we have to obviously get under the hood to look at the business. They haven't given us the ability to do due diligence. That's why we had to go with a public deal rather than a privately negotiated deal. So I can't tell you much except what I can see through public numbers. So through public numbers, obviously, and I think they've made the right decision, they've exited the adult-use market because they couldn't make any money in it.

And they've stayed in the medical market. And they're having some problems in the medical market, even though they have actually a very interesting niche. They do sell direct to veterans, which is a very high margin. Most of their margin comes from that business. Their gross margin comes from that business. Now it's incredible, with like a 58%, 59% gross margin, somehow they can't make money.

I don't understand that. I would love to have a 70% gross margin in my U.S. business; I'd be making money hand over fist. But somehow, they can't make money with that kind of margin. But that business has been cut back by 30%. And in Germany, they also got into the insured business, not the self-pay business like I am, and that business got cut completely now in Germany.

So they are struggling a little bit, and we'd have to look at those. But the answer is this, if the business makes sense, and if I can make money, my first and foremost priority is to the shareholders and to my customers, right? So obviously, we want to continue to service especially the veterans in that market. And so we would most likely definitely stay in that business. But we would also evaluate everything else in Canada in some depth to make a decision as to whether we want to participate in that.

There is -- definitely Canada is going to come back, because you can't have a country like Canada that doesn't have a profitable cannabis business. It's going to have one. It's going to take a little time. And it was on its way. It was on its way until this nightmare with Europe happened where they all started producing again, overproducing. And one of the reasons I'm bidding for Aurora, and their product was failing because it doesn't meet microbials and then they were dumping it on the Canadian market.

So it went full circle. It was coming back. Margins look like it was improving. The Canadian market looks like it was getting better. Then they started again overproducing, I don't know what's with the Canadian growers. I don't know why they can't get their act together. As I told you, less than 1% of our product in the U.S. fails. Literally, I'll tell you something else that's interesting.

We have a woman that runs all of our EU GMP certification out of Germany, very strict German person, right, by the rules. She came to us. She came to Canada. She looked at all the Canadian business, she was like, oh sh*t, this is a nightmare. She came to the U.S. I was expecting her to walk through our facilities and say to us, oh, my God, you guys have to put so much money into this. This is a nightmare.

She said, Holy jeez, these facilities are good. I can get you EU GMP certification like that. So the U.S. players have actually built good, solid, even without having to qualify for these or to register as EU GMP, we've built -- and I'm not saying only us, there's been GTI and Verano and Trulieve, we've all built quality facilities. So yes, we'll have to go through some changes, but not as much as I thought originally because she came over and she said, you guys are 95% of the way there.

That's mind-blowing when you think of how much money has been allocated to some of these grow operations up in Canada. I've seen them firsthand. These are hundreds of millions of dollars, like...

Shadd, it is the biggest question mark I have. I don't know what happened up there. I don't know what happened up there. I literally don't.

A lot of money. I've seen it firsthand like that in piles. Interesting. All right. We're down to our last question. Anthony, you want to fire away with that.

Yes. How can Curaleaf ensure successful post-merger integration if the deal does, in fact, go through?

Listen, it's what I do, right? I bought 26 companies to build Curaleaf to what it is today. I bought, I think, 7 or 8 in Europe alone. That's what I do. I've been doing it. I've been a consolidator in my whole career. I did that in the data center business in Europe. I've done it in the insurance business.

I did it actually in Canada in the Bakken business -- in the Bakken oil business as well, a company called Innova Exploration, which I did and then I sold it to Crescent Point. That's what I do. I buy and consolidate companies, get the synergies out of them, build very, very solid businesses and either take them public or sell them to strategics or create companies that can compete as #1.

So that's what I do. I know that very, very well. And so I feel very comfortable. This is going to be one of the easiest deals, to be honest, we've done. It is going to fit like a glove into our infrastructure, and it's just a great, great transaction. I don't see a lot of work on this one. We've had some problem deals for sure. This is not one of them.

And just one more question, I think that's probably good for an ending note. How would a favorable resolution to the ALJ rescheduling process in the U.S. impact Curaleaf's willingness to raise the bid if at all? And I think that's just also on the assumption that prices would go up on a per share basis in the market.

Guys, you pay what a business is worth not because Curaleaf stock trades at a premium today. It doesn't mean I will go out and abuse it, no way. I have not done a deal in 3 years. I will not go out and abuse my share price. I walked away from a Virginia asset. I will not go and abuse my shareholders or my premium because that's how you lose your premium. You bid on what a business is worth, not because you trade at a premium.

So the premium that you offered here, you felt this is what the business is worth right now.

Absolutely, especially because I couldn't even see it. They wouldn't show it to me. I offered to them to sit down, sign an NDA, let me go and do due diligence, and I don't know what price would have come out of that. It could have been lower; it could have been higher. This is the price that I put on the company based on public information I received.

Interesting to see. And yes, there's a lot of upside potential here. And we talked about other things that I think will indirectly help a lot of U.S. players with the rescheduling of cannabis. It appears around the corner, too. But all in all, there's some interesting times, obviously, for the U.S. landscape right now.

And then once you factor that in, what that international opportunity presents and, in this case, obviously, what this whole acquisition pertains to. But I think that pretty much wraps up basically our questions. I don't know if there's anyone else that has any questions. But again, I really appreciate you doing this. We're about an hour into here, but I think we've gone over quite a bit.

And Shadd, let me just finish by saying this is a great deal for both Curaleaf and Aurora shareholders. I am super excited about it. It really, really is a match made in heaven. I looked at 5 companies in Canada. And by the way, there's other quality companies, but if this doesn't work out for one reason or another, we will look at. But -- and hopefully, they're not like this, they're friendly.

But I did this one because it really was the best match for Curaleaf and for, I think, Aurora shareholders. I'm super excited about it. I beg those people that believe in us and believe in Curaleaf and in me, write your Board, write your CEO, tell them to sit down at the table and have a conversation. I think that's the way to do a deal, not through, no offense, guys, and I love you guys, you're great, but not through the public conversation, but through sitting down and having a negotiation.

Yes. Absolutely. I couldn't agree with you more.

Well said, if you need us in the boardroom to moderate it too with the whole deal. It would be like Vince Vaughn in that first scene in Wedding Crashers that they're trying to set up with the divorce papers.

With the arbitrators.

That's the next move for TDR.

I guess so.

Yes, arbitration.

All things considering, right? Anyway, listen, good to hear from you. Thanks for taking the time even though you're overseas. And yes, when you get a chance, make sure you get some business cards from me across the street because I need to get a hair transplant. I'm losing my hair, getting older. But good seeing you.

And more importantly, I think this hopefully gives, I think, both Aurora and Curaleaf shareholders a clear understanding as to where this deal sits right now. But the big takeaway here is that, look, the offer has been presented. Let's hear back to have some dialogue and you're open for conversation and transparency.

And I think you've answered a lot of questions on whether you're a short-term or long-term shareholder of Aurora, you look at what you're going to get in return, what the upside potential is that, yes, if you're a bag holder in some sort of ways and have lost a lot of money, you factored a lot of this stuff in when it comes to acquiring this company and becoming Curaleaf shareholders for a lot of the Aurora shareholders. But more importantly, I think let's have some conversations and see where this goes, right? Yes.

And we'd love to do the same, obviously.

Yes. Well said. All right, Boris. I appreciate your time. Take care.

Thanks, guys. I appreciate your time.

All right. Yes. Fair points. And when this deal was announced, and like he said at one point, as of yesterday's close, it's now a 51% premium. So we've talked about...

90 days, next 90 days is going to be interesting.

Next 90 days are going to be very interesting. Is that -- I think there was like 105 originally or something along those lines, and now we're down to x amount of days. But yes, but he made it clear. Hopefully, something gets done with this. But if it doesn't, then he's definitely got his eyes on other players in Canada as well. So there you go.

Absolutely.

All right, my friend. Good stuff. Thanks for putting this together. Everybody, thanks for logging on and submit your questions. Back here later this afternoon at 4:00, with Trent Woloveck from Jushi. We'll get his latest news from all the news regarding adult use in Virginia, plus we'll get a PA update, and we'll probably talk about hemp a little bit, too. And then Adam Stettner will be on for our second segment for his weekly appearance that's coming up today at 4:00 on TDR presented by Flowhub. AV, we'll see you later today. Thanks again, everyone.

Hey, everybody. Thanks again for watching. A quick reminder, right now, we only have 40% of our audience that consumes our content is subscribed. So if you can make sure to subscribe to our channel here at TDR, we'd appreciate it. As usual, leave some comments below. Let us know if you have any questions from today's live stream, we'll get back to you as soon as we can. In the meantime, enjoy the rest of your day, and we'll see you next time in our latest TDR, Trade to Black live stream. I'm your host, Shadd Dales, and thanks again for watching.

Good day, and welcome to the Curaleaf Holdings, Inc. Second Quarter 2026 Conference Call. [Operator Instructions] Please note 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 Curaleaf Holdings Second Quarter 2026 Conference Call. Today, I'm joined by Chairman and Chief Executive Officer, Boris Jordan; President, Rahul Pinto; and Chief Financial Officer, Ed Kremer.

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 securities 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 that were applied in drawing a 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 release on SEDAR and EDGAR.

During today's conference call, in order to provide greater transparency regarding Curaleaf'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 measures 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 Jordan. Boris?

Thank you, Camilo. Good morning, everyone, and thank you for joining us to discuss our second quarter results. This earnings call marks my 2-year anniversary as CEO, making it an appropriate moment to reflect on the progress we have made. When I stepped into the role, our priorities were clear: stabilize the business, improve margins and cash flow, sharpen execution and rebuild the foundation for durable growth.

Simply put, I wanted excellence to become our operating standard across Curaleaf. That was the purpose of our Return to Our Roots strategy. Over the first 18 months, that work has delivered meaningful results: stronger cultivation economics, improved flower quality and consistency, tighter merchandising discipline, greater operational efficiency and a more focused organization. With that foundation substantially reset, we have moved from stabilization to acceleration.

In March, we introduced Built for Growth, a disciplined framework focused on customer centricity, brand building, operational excellence, sustainable organic growth, international expansion and value-accretive opportunities as industry conditions improve.

Our second quarter results reinforce that this strategy is gaining traction across the business. We have a strong cohesive team aligned around one common goal: making Curaleaf the global leader in cannabis. While there is still work ahead and significant opportunity to capture, we are firmly on the right path with the team, strategy and operating discipline to lead the next phase of cannabis.

Last quarter, I spoke to our operational -- I spoke of our operational execution enhanced by tailwinds, specifically regulatory progress and an improving macro backdrop that's driving a market reset. This was the case in the second quarter as the team's disciplined execution drove revenue of $340 million, organic growth of 10% compared to last year, once again surpassing our guidance and internal projections.

Our domestic and international segments grew 7% and 26% year-over-year respectively, as we continue to leverage the operational improvements made over the last 24 months. Gross margin was 50% and adjusted EBITDA was $70 million, representing a 21% margin despite a 140 basis point drag from international, consistent with an emerging business and a nascent growth curve.

Net income from continuing operations was $12.5 million compared to a net loss of $48 million last year. We ended the quarter with $107 million on the balance sheet. Overall, I'm encouraged by the momentum we are seeing across our markets and our business, and I believe we are well positioned for the second half.

Our U.S. business was clearly -- has clearly regained momentum. This was our second consecutive quarter of year-over-year growth followed -- following a period of sales compression, an important proof point that our reset is taking hold in a durable way. We achieved this while also expanding gross margin. The foundational work we have done on our largest and most profitable geography is now visible across the business: higher quality flower averaging 31% potency, improving cultivation yields, tighter in-store assortment and stronger execution at the market level.

With those building blocks in place, we are now focused on the next phase of our Built for Growth strategy: customer centricity, operational excellence and brand building, all supported by an efficiency mindset.

Rahul will speak to each of these priorities in greater detail, but the key point is that our U.S. platform is no longer just stabilizing. It is beginning to scale with greater consistency and discipline.

In addition to the organic growth we are generating across the existing footprint that should be boosted by the hemp loophole closing, we continue to evaluate new state opportunities that can provide another leg of domestic growth, including Georgia, Texas and Virginia.

I'm also encouraged by the potential for South Carolina and Wisconsin to advance the medical cannabis programs in their next legislative sessions in early 2027. When we combine the momentum we are seeing in the core business with the potential for selective acquisitions and new market expansion, the domestic growth outlook is increasingly compelling.

Curaleaf International delivered another strong quarter with revenue growing 26% year-over-year, led by the U.K., Germany and Poland despite ongoing third-party supply volatility. In the U.K., growth was driven by continued expansion in clinic patient counts and strong wholesale demand for Curaleaf flower and non-flower form factors, including oils, vapes and pastilles.

We also successfully launched our Huala value brand in both flower and vape formats, expanding access for patients while reinforcing our ability to serve multiple price points in the medical market.

In Germany, sales growth was supported by strong demand for our QMID inhalation device as well as our Huala and Curaleaf branded flower strains. QMID has gained meaningful early traction since its launch last year, and we are evaluating opportunities to expand the platform into live resin and rosin formats.

At the same time, we are closely monitoring price compression in Germany, particularly at the lower end of the pricing spectrum, and we remain disciplined in protecting margin rather than chasing volume at uneconomic price points.

In April, we also completed the buyout of the remaining 45% minority interest in Four 20 Pharma, bringing Curaleaf International to 100% ownership. This gives us full strategic and economic control of the platform at a time when Europe is becoming an increasingly important growth vector for the company.

On the regulatory front, we are encouraged by early signs that German regulators are beginning to a take more proactive stance on enforcement against non-EU GMP product. Too much lower quality or noncompliant product has entered Europe through channels that circumvent regulations designed to protect patients. Stronger enforcement protects patient interest and should help create a healthier, more compliant market structure, one that benefits operators like Curaleaf that have invested in quality, consistency and regulatory discipline.

Looking ahead, we believe Spain, France and Turkey represent 3 of the most important new medical cannabis opportunities in Europe and the broader international market. These countries are advancing toward their respective medical program launches and together represent more than 200 million people, roughly equivalent to the population of 10 Floridas.

In Spain, a market of 48 million people, Curaleaf became the first company to receive approvals for 2 cannabis medicines last month. We have already received order indication from Spanish pharmacies and expect to begin shipping imminently.

In France, a market of 69 million people, we are working to establish a partnership with a leading pharmaceutical company for distribution. Similar to Spain, the French market is expected to begin with approved oil-based medicines sold through hospital pharmacies.

In Turkey, a market of 87 million people, final program rules are expected by the end of the summer with the program anticipated to launch in 2027.

Taken together, these developments reinforce our conviction that Curaleaf International is one of the most compelling growth platforms in global cannabis and our most distinct competitive differentiator. We are building a scaled compliant and medically focused business across large markets that remain in the early innings of adoption. And while we believe the coming years represent a significant growth opportunity for our international segment.

Turning to the regulatory tailwind. April marked a defining moment for U.S. cannabis industry as the Department of Justice moved state-regulated medical cannabis and FDA-approved cannabis products to Schedule III under the Controlled Substances Act. This was the most consequential shift in federal cannabis policy in more than 5 decades and an important federal acknowledgment that medical cannabis has a legitimate and enduring role within the U.S. healthcare system.

Last month, the second phase of the rescheduling addressing adult-use cannabis began with the ALJ process, which concluded on July 15. Thus far, the process has proceeded according to a fast-paced schedule. While there remain procedural steps before a final rule is issued, our view that adult-use cannabis could be rescheduled by year-end and possibly before the midterm is unchanged.

Rescheduling would set off a new chain of events, including a potential uplisting to a major exchange. We have been in close and constant communication with the U.S. exchanges, and we are prepared to uplist the entire company rather than deconsolidate adult-use once cannabis rescheduling is made effective.

In addition, we expect greater clarity on the retroactive treatment of 280E taxes as well as guidance from FinCEN that we believe will direct financial service providers to treat legal cannabis operators like all other Schedule III businesses. That should improve access to traditional financial services such as credit cards in our dispensaries.

Longer term, we are also assessing a world in which exports and interstate commerce are permitted. We believe exports could begin within 12 to 18 months, reflecting the time required to stand up the EU GMP-ready facilities domestically. That would allow us to leverage the infrastructure we have built in the U.S. and Europe to create a meaningful advantage as we optimize our established value chain from seed to patient. Interstate commerce could also materialize once the proper infrastructure is instituted by the DEA. However, the time line to materialize will likely be longer than exports.

Despite efforts by many to extend the hemp loophole permanently, based on our discussions with numerous legislators, we believe that inhalables and edibles will be removed from the market when the pending hemp shutdown takes effect later this year. This should be a significant macro tailwind for the regulated cannabis industry when the roughly $25 billion unregulated competitor is expected to be forced offline.

We believe the regulated industry is already beginning to see early traffic benefits as states move ahead of the federal change, prompting hemp consumers to migrate back to the dispensary channel. As more consumers turn to licensed dispensaries to replace hemp-derived products, we see a credible path towards pricing stabilization in 2027 that could yield a return to double-digit industry growth.

Taking a step further, if demand shifts faster than supply can respond, the regulated market could enter a period of tighter supply, creating an even stronger 2027 growth algorithm driven by both traffic gains and positive pricing growth. Equally encouraging, we are seeing stronger enforcement activity by federal agencies against illicit operators in key markets such as Oklahoma, California and Maine, 3 states that are hotbeds for illicit cannabis activity impacting the entire U.S. market.

Removing illicit supply from the market should further support demand in the regulated channel and reinforce our view that 2027 is setting up to be a resurgent year for legal cannabis. For Curaleaf, these tailwinds bolster the strategy we have pursued for years: investing in quality, consistency, regulatory discipline and a national platform capable of serving both medical and adult-use consumers as the market continues to evolve. We believe that combination positions Curaleaf to lead as the industry becomes more regulated, more competitive and more global.

Before I close, I want to thank every Curaleaf team member for the focus, resilience and execution that made this quarter possible. Over the past 2 years, we have asked a great deal of this organization and our people have responded with discipline, urgency, and a shared commitment to building Curaleaf into the global leader in cannabis. I'm grateful for their hard work, proud of our progress and excited about the opportunities ahead.

With that, I'll turn the call over to our President, Rahul Pinto, to discuss our domestic highlights. Rahul?

Thank you, Boris. The pillars of our Built for Growth strategy that we introduced last quarter, customer centricity, brand building and operational excellence, are now clearly translating into domestic results. In the second quarter, our domestic business grew 7% year-over-year, representing an impressive 500 basis point sequential acceleration from the first quarter.

Growth was broad-based with Ohio, Utah, New York, Florida and Maryland, each delivering double-digit growth. That breadth is important. It shows the progress we are making is not dependent on one market or one initiative, but rather reflects stronger execution across the platform.

Even as retail price compression remains a factor, the rate of compression is beginning to moderate in several markets, and we are staying disciplined, improving mix, elevating product quality and growing without sacrificing margin.

Let me unpack those 3 pillars with a few real-time examples. First is customer centricity. At retail, our teams continue to improve the customer experience, sharpen assortments and use data more effectively to match product, pricing and promotion to local market demand. One example this quarter was the launch of a Spanish language experience to our website, app and kiosks, recognizing that the Latino community has been historically underserved in many of our markets. Meeting customers where they are in language, product offering, price point and experience is essential to building trust, loyalty and enduring relationships.

Second, our brand-building progress is also showing up in market share. According to Hoodie Analytics, our brand portfolio continues to hold a top market share position, underscoring the strength of our scale platform and the increasing relevance of our portfolio across key markets.

Select continues to be the #1 vape brand across our markets, while Anthem-infused pre-rolls reached the #2 market share position in Illinois and #5 overall across its operating markets.

These are important proof points that our focus on assortment, innovation and brand architecture is translating into stronger consumer relevance and competitive momentum. Product innovation remains a key driver of that brand-building strategy. We continue to build momentum behind our differentiated platforms, including Dark Heart and Briq 2, while expanding offerings that meet consumers across formats, occasions and price points.

This is the type of disciplined innovation we want to scale, products that are relevant to consumers, supported by operational capabilities and accretive to the strength and consistency of the Curaleaf portfolio.

Third, operational excellence was evident through Q2 as our retail team seamlessly serviced a 10% increase in transactions across the network, more than offsetting a 3.9% decline in average unit retail pricing, delivering 4% year-over-year revenue growth. That traffic growth was not coincidental.

The states with the strongest transaction gains were also among our strongest overall performers, reinforcing the direct connection between local execution, customer engagement and revenue growth as we drive national scale with local nuance. We also continue to expand access and convenience for our customers, opening 2 new dispensaries in Florida during the quarter, bringing our Florida footprint to 73 stores and our nationwide footprint to 174 operated and managed locations.

Wholesale was another standout contributor to the quarter, with branded sales growing 28% year-over-year, a clear indication that demand for our portfolio is strengthening beyond our own retail footprint. That performance reflects better cultivation output, more consistent flower quality, sharper commercial execution and a brand architecture that is resonating with both consumers and third-party partners.

As we continue to raise product quality and bring more discipline to how we segment, price and support our brands, wholesale is becoming a more powerful channel for expanding share, increasing brand visibility and reinforcing Curaleaf's position as one of the most trusted scaled operators in cannabis.

Underpinning each of these pillars is an efficiency mindset that allows us to invest behind growth while maintaining discipline across the cost structure. We are continuing to take costs out of the system, simplify how we operate and redeploy resources towards the highest return opportunities. The goal is not simply to be leaner. It is to build a more agile, scalable business that can drive sales, expand margin and produce greater operating leverage as revenue grows.

Taken together, the second quarter demonstrated the power of our domestic platform when strong local execution is paired with a clearer operating model. We are driving traffic, improving assortment, strengthening brands and staying disciplined on margin. There is still work ahead, but the domestic business exited the quarter with better momentum, stronger execution and a more scalable foundation for growth in the second half of the year.

With that, I'll turn the call over to our CFO, Ed Kremer. Ed?

Thanks, Rahul. Total revenue for the second quarter was $340 million, a 5% sequential increase compared to the first quarter and increased 10% organically compared to the same period last year. Strength in Ohio, Curaleaf International, Utah, New York and Florida was partially offset by declines in Arizona and Illinois.

Our domestic segment grew 7% year-over-year, with retail growing 4%, complemented by 20% year-over-year growth in domestic wholesale. International revenue grew 26% year-over-year, driven primarily by Germany, the U.K. and Poland. Total retail revenue was $241 million, an increase of 5% compared to the second quarter of 2025, while strength in total wholesale increased 21% year-over-year to $96 million, representing 28% of total revenue. The growth in wholesale was driven by strong performance in New York, Ohio, Maryland and robust growth in Curaleaf International.

Our second quarter gross profit was $170 million, resulting in a 50% gross margin, an increase of 170 basis points compared to the prior year period. The primary drivers of this expansion were continued cultivation efficiency gains and disciplined labor expense controls in our cultivation facilities, higher vertical mix and third-party margins, partially offset by faster growth of lower-margin international and slightly lower domestic wholesale margins.

Our domestic gross margin was 51%, an increase of 170 basis points compared to the first quarter. As we saw last quarter, the rate of price compression continued to moderate in certain markets during the second quarter. At the same time, our operations team continued to raise the ceiling on cultivation productivity, quality and efficiency, creating a more durable foundation for margin expansion.

Importantly, our pricing initiatives are still in the early stages, and we believe there remains meaningful runway to improve price realization, optimize mix and drive additional margin upside over time.

International gross margin was 42%, a decrease of 20 basis points sequentially, driven by price compression in Germany and foreign currency translation, partially offset by stronger capacity utilization in Spain and an improved mix of value to premium.

SG&A expenses were $132 million in the second quarter, an increase of $20 million from the year ago period. Core SG&A was $115 million, an increase of $15 million from the prior year. The year-over-year increase in our core SG&A primarily reflects higher bonus accruals due to operational outperformance, international expansion, additional headcount and new store openings in Florida and Ohio.

Core SG&A was 34% of revenue in the second quarter, a 200 basis point increase compared to the prior year. For the remainder of 2026, we have instituted a series of cost initiatives that will drive expense leverage in the back half of the year.

Second quarter adjusted EBITDA was $70 million, an increase of 3% compared to last year, while adjusted EBITDA margin was 21%, inclusive of a 140 basis point drag from international.

Second quarter net income from continuing operations was $12.5 million, or $0.05 per share, compared to a net loss of $48 million or a loss of $0.24 per share in the prior year period. We recorded an income tax benefit of $38.8 million in the quarter. This reflects, among other items, the April 23rd reclassification of medical cannabis to Schedule III, as our medical business is federally legal and no longer subject to Section 280E, which reduces the cash taxes we pay, and a reassessment of our deferred tax assets and valuation allowances, which resulted in a noncash benefit.

Going forward, 280E will only apply to our adult-use business. We repurchased and retired a total of 1.01 million shares during the 6 months ended June 30, 2026, for a total of $7.4 million.

Now turning over to our balance sheet and cash flow. We ended the quarter with cash and cash equivalents of $107 million. Inventory increased $22 million or 10% compared to the second quarter of last year. This compares to 10% sales growth in the same period and is reflective of healthy inventory levels.

Domestic inventory grew 4% year-over-year, while international inventory grew 50%, largely due to the lumpiness and timing of third-party deliveries. Capital expenditures in the second quarter were $16 million. And for 2026, we continue to expect capital expenditures to be approximately $80 million.

We generated second quarter operating and free cash flow from continuing operations of $29 million and $13 million, respectively. We expect operating cash to continue building in the back half of the year, consistent with the cadence of our business.

In June, we completed a 1-for-3 reverse split, an important step in advancing our preparedness for potential uplisting to a major U.S. exchange. We also received shareholder approval at our Annual General Meeting to redomicile the company from Canada to the United States. As a U.S. filer, now reporting in accordance with the SEC requirements, we have significantly streamlined the path to completing the redomicile and are positioned to move quickly when market conditions and other relevant factors make the timing appropriate.

Now on to our outlook. We continue experiencing strong increase in traffic due to the many initiatives we have in place. However, we are mindful of the global macro volatility, higher energy costs and potential for rising interest rates that could impact the overall health of our consumer and trim demand.

Taking these factors into account, coupled with seasonality of 2 of our biggest states, Florida and Arizona, we expect total revenue for the third quarter to increase low single digits sequentially from the second quarter, which at the midpoint implies approximately $347 million.

And with that, I'll turn the call back over to the operator to open the line for questions.

[Operator Instructions] The first question comes from Bill Kirk with ROTH Capital Partners.

Boris, you talked about third-party supply volatility when selling into international markets. So what can your relationship with Cannara Biotech do to help remove that volatility? Or what other ways can you improve sourcing? And what does international look like if you can remove those sourcing limitations?

Thank you, Bill, for the question. That's one of our biggest issues right now in our international business is supply chain. And I think it's not only for Curaleaf, it's for almost all operators, at least those operating in the regulated markets. And one of the problems is failed product and inconsistency of delivery of that product on time so that we can supply our customers and our pharmacies around the globe.

And so we are looking at better ways to do it. We are working with -- first of all, diversifying the amount of people we work with. So we don't depend on any one flower provider. So today, we provide about 20% of our supply comes from our own facilities. We'd like to increase that to somewhere between 50% and 75%, and we intend to do that over the next 6 to 12 months.

And for the balance, we're going to use people like Cannara, people like Village Farms and many other operators on the globe in order to supply those products. Now the most important thing is to make sure that they're supplied at the right price, the right quality and so that they're using generics that are attractive to our customers.

And so several things will happen. One is by vertically integrating and getting our footprint to a 50% to 75% vertical, we will increase margins quite substantially in our European business because margins are much better. Secondly, we will bring down the amount of inventory we have to carry because today, because of a problem in supply chain, we have to carry more inventory than we would carry in normal situations.

So our cash conversion will also come down from about 120 days to less than 60 days. So all of these things will dramatically improve the quality of our supply chain, and it's something that we're going to be working on and are working on intensely here between the next 6 to 12 months.

And if I could switch to the U.S. In the last few months, it seems like some of your larger MSO competitors got a little more aggressive on price in some of their top market share states. Now they're not always some of your largest states, but in their top market share states, some of the larger guys seem to have gotten more price competitive. Do you share this observation? And why do you think before some of these demand catalysts, the market share leaders would be the ones pushing price lower in some states?

Well, I think it's something to do with historical situation around inventory as well. A lot of the companies are rightsizing their inventories right now for aging inventory. As you know, there's an aging inventory barrier in all of these states from the regulators. And so people are trying to bring those things in below. So that's what we're seeing.

Also, obviously, continued proliferation of hemp, continued proliferation of illicit product is definitely impacting the market. Also, a lot of our competitors run what we call an open growth sort of strategy where they plant fully. We tend to only plant to our demand plans. We have demand plans out 12 months. 9 months is very certain. And so we grow out to plan for that demand.

So we should actually come up short. I'd rather come up a little bit short of product than end up being long product. I think a lot of our competitors are now rightsizing that and moving potentially to a similar model that we use, which is growing only to our specific demand plan.

The next question is from Aaron Grey with Alliance Global Partners.

First one is regarding the potential hemp lift. Given your broad footprint, can you speak to what markets you believe are best positioned to benefit from the pending intoxicating hemp ban? And are there some initiatives or on-the-ground marketing you can do as we approach November to better make consumers aware of the legal cannabis offerings to ensure you capture that demand?

Yes. So very good question. I think that the way to address it is, let's be completely honest, hemp is everywhere in every market. You can't go anywhere without bumping into hemp products across the whole country. Even in states that don't have regulated cannabis programs, you're going to have hemp. As a matter of fact, in some of those states, you have larger hemp markets than you do in regulated cannabis states.

So it's going to have an impact across the board. I've been quite vocal on this for over a year, but I think that organic growth for the industry next year could be somewhere between 10% to 15% on the back of the inhalable hemp shutdown, which we anticipate will happen, even though there's been a lot of chatter, and I think it's one of the reasons the market is sold off today, about the fact that there's a risk of extension. We believe there's virtually 0 risk of that extension, extension beyond what I would say, the December 11th timetable.

That still is not certain either. I'm not going to get into whether that happens or not. I think that's a small point, but I do think they're giving people time to get products off the shelf. I also think that what's happening is the alcohol industry is trying to get some level of approval for beverage to get across the Congress, and they would like to have some more time.

So I think there's a lot of drivers. But I can tell you one thing, we do not anticipate that inhalable products, and we've received this -- I want to be firm -- from many, many senators that I've personally spoken to over the last several days, there will be no extension, particularly from the Republican side, beyond the December 11th timetable if such a thing happens at all. And we still have to wait and see.

Appreciate that color there. Second question for me. Just as we think about the EBITDA margin profile over maybe the medium term, I know during different parts over the years, you focused a little bit more on growth, more profitability. So how should we think about over the next year or 2, the evolution of the EBITDA margin profile as you look to focus and balance that growth and profitability?

Listen, we're very, very focused on profitability and cash flow generation. I think you'll see that expand in the second half of the year as we are currently embarked on a very substantial cost reduction program that over the next 12 months will reduce $35 million to $40 million of costs out of our SG&A. And so we're very, very focused on that. And I think that that's going to improve our numbers and our cash flow.

We're also very focused, as I mentioned with the previous question, on bringing down our inventories, which will also contribute substantially to cash flow. One of the reasons our inventories are up is because of the international business and the rapid growth we're seeing there. But more importantly, because of the very inefficient global supply chain for cannabis, which is raising our inventories there.

So our focus is on margin, our focus is on pricing. I do think that you're going to see actually -- I know I'm one of the few people in the industry who thinks this, but I do think you might have not only stabilization, but potentially an increase in pricing by next year.

Likewise, we are moving to -- moving our products, turning our products faster through our retail chains, which is also going to bring down our costs. And we have numerous initiatives through the whole supply chain as well as our retail arm and bringing our costs down and focusing on profitability.

And so I think you're going to see -- the one thing that you're going to see in Curaleaf is a continued expansion around our margins rather than the other way. Now one thing we have to be cognizant of is, if our competitors continue to discount heavily, that could have an impact and obviously, macro trends. But at the moment, we're hopeful for a settlement finally in the Middle East situation that if fuel prices come down, I think the consumer can be again emboldened, we can avoid an interest rate hike. These are all positive things for our sector, and we will continue to expand our profitability.

The next question is from Kenric Tyghe with Canaccord Genuity.

Congrats on the quarter. Boris, just a little something of a follow-up or rather parallel to one of the earlier questions. But with respect to Ohio and the hemp unlock, we all know it is a big quarter for the -- for Ohio, but it seems to have been a massive quarter for you in Ohio.

Can you speak to what you did differently to better capture some of that hemp unlock or what you were doing with respect to your offering that allowed your sort of position and share to grow as fast as it appears to have grown in Ohio in the quarter? It just seems to be a bit of a standout in my mind and I thought perhaps you could provide some insight on how you did what you did in Ohio.

There are several factors in Ohio that expanded our growth in Ohio. Firstly, we opened several new stores. Obviously, in a limited store market, that's going to be very helpful in terms of your verticals. So that helped our growth. And we're still one more store away from our maximum amount of stores. That store should open up in the fourth quarter, I believe, in October. So we'll have our full suite of stores.

The other thing we did, and that only partially came through in the numbers, which will come through a lot more in the next several quarters, is we acquired an additional grow facility, increasing our capacity by more than double. We were still operating under one of the small initially licensed medical grow facilities, a 25,000-square-foot canopy, with no ability to expand that facility.

We acquired a facility from PharmaCann as they exited the market. That has more than doubled our capacity. That happened, to be honest, it only closed a couple of days ago, but you will start to see increased growth because of that facility. And that facility is now fully on Curaleaf products up until for the last sort of 1.5 months, it's been still producing PharmaCann product. As of this week, it's solely Curaleaf product and Curaleaf flower and Curaleaf quality. And so we think that our business and particularly on the wholesale side now in Ohio will continue to expand and continue to grow.

And lastly, of course, is the hemp market, right? Obviously, the shutdown of hemp in Ohio has had a huge contribution. And again, going back to my thesis that I outlined on earlier calls, even last year after the hemp ban, I think that Ohio shows you what kind of growth our regulated industry can have and experience if there's a full not only shutdown, but enforcement of shutdown in these states of the hemp business.

I want to remind everyone that before hemp came into play approximately 3 years ago, the cannabis industry was expanding at almost a 20% annual growth rate, and that was virtually sucked out by the hemp market from the cannabis sector. As those products recede from shelves and as enforcement continues, we think that, as I said earlier, that a 10% to 15% industry growth rate is very, very possible in 2027.

And if the continued crackdown on growth, which we believe and understand and know has been substantial already in Oklahoma as the DEA moves into now become the major regulator in the sector, that is going to help the market even more.

So not only do we have hemp being removed from shelves, but we also have illicit cannabis supply. Now albeit it won't completely disappear, we know that. But it is helpful that the DEA is now taking an aggressive position on illicit cannabis growth across the country.

Great insight. Just switching gears quickly, intrigued by your commentary around sort of the Georgia, Texas and Virginia. Just in the context of recent headlines, how is your thinking evolving on those markets? Or how has it evolved? And if you were to sort of rank order or provide a wish list around what you would like to see or what you think you can do in those markets, can you give some indication of what that would look like?

Yes. Curaleaf will -- as obviously the biggest operator globally, we need to be in the biggest markets. And so we have set our sights on both Georgia and Texas for sure. And we will -- we're looking at different ways to engage in those markets. And we hopefully will have news shortly on our strategies in those markets. I wouldn't want to talk about it. But we intend to play in both Georgia and in Texas.

The next question is from Frederico Gomes with ATB Cormark.

I'll go back to the comment about increased vertical integration internationally and how that can improve margins. It looks like bringing that to up to 50% to 70% seems like a significant expansion. So can you provide more color on how you're looking to achieve that? Would that be done through organic investments and expanding some of your current facilities, a bit of buying new assets? And if so, geographically, would you look to acquire assets in Europe or Canada? Or I guess, what do you think makes more sense for you strategically?

I mean, basically, it's all of the above. We will be expanding our existing facilities in Portugal and Canada. We'll be looking at opportunistic acquisitions in those areas where we think the pricing is right to supply those markets.

And thirdly, we are in active, obviously, monitoring mode and preparing for the ability to export out of the U.S. So all 3 of those are ones that are going to contribute to our verticality going into Europe. Obviously, the U.S. side of it is still probably some time away. We think probably within sort of 12 months. So that's last on the list.

And the other 2 are expanding current facility, which we're already doing and potentially acquisitions of facilities that would meet our requirements in order to build up our supply chain to that level.

And then my second question is just on Germany. You mentioned some price compression at the lower end of the spectrum there. And understanding that you play on the premium side of the market. But I guess, to what extent are you seeing or do you expect to see that price compression to migrate to that premium side of things? And is that sort of goal of increased verticality a way to prepare ahead of that maybe potential price compression on the premium side?

Absolutely controlling -- it's not only about price. It's also about quality and it's about being able to plan your assortment. So these are all very important things. Many of the players in the German market are, in fact, brokers. They're just people that buy cannabis around the globe, greenwash it which is an illegal process, and then flip it in the Canadian market. There's no branding. There's no marketing. There's nothing. And that's forced the compression in the German market.

So there are several things happening. First of all, we anticipate in the fall, more rigorous enforcement from the German authorities. We're now seeing it already in the U.K. and we've seen it actually start happening in the U.K. We think it's going to happen in Germany very, very shortly in the fall. They will hopefully stop this practice of greenwashing.

Curaleaf's approach is very different. Our approach is very much a branding approach, branded product, our own product that's preplanned and safe and of a higher quality. And so that is our strategy very much. And so we may not have as high of a growth rate as some other companies that are showing today, but our gross margin dollars exceed those.

So we have one competitor that's tripled their volume. But with that tripling of volume, their gross margin dollars are the same as our 25% growth in that marketplace. And so we're very focused on profitability, maintaining margin, specifically because our approach is one to create brands and to create stickiness with our customers so they continue to return to buy our products and not just buying at the lowest price because it's available in the market today. So that's very much our strategy.

This concludes our question-and-answer session. I would like to turn the conference back over to Camilo Lyon for any closing remarks.

Thanks, everyone, for dialing in. We will talk to you next in early November.

The conference has now concluded. Thank you for attending today's presentation. You may disconnect.

Good morning. My name is Camilo Lyon, Chief Investment Officer of Curaleaf Holdings, Inc. And on behalf of our management and directors, I would like to welcome you to the Annual General and Special Meeting of Shareholders of Curaleaf Holdings, Inc. I will be acting as Chair of the meeting today. On behalf of the Board, I wish to express thanks to those shareholders who have submitted their proxies in advance of today's meeting.

This year, again, the meeting is being held virtually via live webcast only. The company views the use of technology-enhanced shareholder communications as a method to facilitate individual investor participation, making the meeting more accessible and engaging for all involved by permitting a broader base of shareholders to participate in the meeting, which is consistent with the goals of the regulators, stakeholders and others invested in the corporate governance process.

As this meeting is being held virtually via live webcast, we think it is necessary to set out a few rules for the orderly conduct of the meeting. One, registered shareholders and duly appointed proxy holders who wish to communicate with the members of the management team and the Board or who wish to present or ask a question in respect of a motion may do so using instant messaging on the Lumi virtual interface.

Two, as described in our circular, duly appointed proxy holders were required to register with our transfer agent and obtain a control number prior to this meeting in order to participate, vote and ask questions during the meeting.

Three, when asking a question, please indicate which entity you represent, if any, and confirm that you are a registered shareholder or a duly appointed proxy holder.

Four, questions asked during the meeting will only be addressed at the end of the meeting unless they relate to procedural matters or are directly related to the motions presented before the meeting.

Five, questions or comments containing inappropriate language or that are otherwise disruptive to the orderly conduct of the meeting for all shareholders will not be answered.

Six, questions which were already answered or that are redundant or repetitive will not be answered.

Seven, for the purposes of the meeting today, voting on all matters will be conducted by a single electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on all business items at the same time. Curaleaf has determined that voting will be open at the beginning of the formal part of the meeting and will remain open throughout the same. This will allow you to choose to vote on each resolution as soon as voting opens or wait until the conclusion of the discussion on each resolution prior to casting your votes.

Eight, only registered shareholders and duly appointed proxy holders of the company are permitted to participate in the voting.

I would also like to advise everyone that certain of the comments you may hear today may be forward-looking statements that involve assumptions, risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. We refer you to our disclaimer regarding forward-looking statements contained in our annual information form for the year ended December 31, 2025, which was filed on SEDAR+ on February 26, 2026.

Please note that only registered holders of subordinate voting shares and multiple voting shares of record as of May 5, 2026, or their duly appointed proxy holders are permitted to participate, ask questions and vote at this meeting. The formal part of the meeting should last around 45 minutes. We will end the meeting with a short moderated questions-and-answer period to answer a few questions from stakeholders.

It should be noted that based on the proxies already received by the company prior to the meeting, the required level of shareholders' approval to adopt each of the resolutions to be presented to the shareholders at today's meeting has already been obtained. To expedite the formal part of the meeting, I will move and second all motions as permitted under the company's articles.

We will now proceed with the formal portion of today's meeting. Please note that voting is now open and will remain open throughout the formal portion of the meeting. I call to order the Annual General and Special Meeting of the company's shareholders. With the consent of the meeting, I appoint Peter Clateman, Chief Legal Officer, to act as Secretary of the meeting.

In addition and with the consent of the meeting, I appoint Odyssey Trust Company through Stacey Diocampo as scrutineer. The scrutineer will report the number of subordinate voting shares and multiple voting shares represented in person and by proxy at this meeting, tabulate the votes and report the results. The scrutineer has provided me with a copy of the report, which indicates that at least 2 shareholders of the company are present or represented by proxy. This meets the quorum requirements in the company's articles. And as such, we are permitted to proceed with the meeting. A copy of the final report on attendance will be filed with the records of the meeting.

I have here the certificate of our transfer agent, Odyssey Trust Company, indicating that proper notice of the meeting has been given in accordance with applicable corporate and securities laws and the articles of the company. Accordingly, unless there is an objection, I will dispense with the reading of the notice of the meeting. I direct that a copy of the notice with proof of mailing be kept by the Secretary with the records of the meeting.

The purpose of today's meeting are set out in detail in the management information circular dated May 7, 2026, as supplement to the circular dated June 15, 2026. Copies of the circular were made available to shareholders on or around May 14, 2026, together with the notice of the meeting in the form of proxy. Copies of the circular and other meeting materials are available under the company's profile on the SEDAR+ website.

In addition to the customary annual meeting matters, there are also items of special business for your consideration today. You will be asked to consider and, if thought advisable, to pass with or without variation. One, an ordinary resolution to approve the continued ability of the company to issue awards under the company's 2018 Stock and Incentive Plan as amended from time to time, including the approval of unallocated awards thereunder. Two, a special resolution to approve an amendment to the articles of the company having the effect of amending the share capital of the company. Three, an ordinary resolution to approve the implementation of our proposed exchange program, whereby up to 10,070,478 of the company's currently outstanding stock options having an exercise price or subject to performance vesting conditions tied to a trading price per share equal to or exceeding $5 will be exchanged for the restricted share units of the company. And four, a special resolution to approve a plan of arrangement under Section 288 of the Business Corporations Act, British Columbia, involving, among other things, the continuation of the company out of British Columbia, Canada, to the state of Delaware in the United States.

For the purposes of the meeting today, voting on all matters will be conducted by a single electronic ballot. As noted earlier, voting for all business items will remain open throughout the formal portion of the meeting until voting is closed near the end of the formal portion. After you have registered your votes, the scrutineer will compile the votes in respect of each business item.

You should know that proxies lodged before this meeting allow management of the company to cast a significant number of votes. Based on the number of shares represented at this meeting, the members of management here with me today will be able to determine the outcome of all motions that will go to a vote today. I may, therefore, declare that motions, which will go to a vote today as carried even though all of the votes may not have been counted or a final report may not yet be available. I shall do this to keep up the pace of the meeting.

Under the company's articles, the Chair of the meeting can propose motions and no motion proposed at a meeting of shareholders is required to be seconded. In order to expedite the meeting, I will propose certain motions and will not call for a seconder, but this is in no way intended to inhibit any questions or discussion with respect to the motions. I now declare that this meeting was properly called and duly constituted for the transaction of business.

The first item of business is the presentation of the company's consolidated financial statements for the fiscal year ended December 31, 2025, as well as the auditor's report thereon. These financial statements and the auditor's report were made available on SEDAR+, on the SEDAR+ website under the company's profile on February 26, 2026. The financial statements were also made available on a dedicated site hosted by our transfer agent, Odyssey Trust Company, as required under the notice and access regime.

Unless there is an objection, I will dispense with the reading of the auditor's report. We will entertain any questions with respect to the financial statements in the general question period.

We now move to the next item on today's agenda. The articles of the company require a minimum of 3 directors of the company. There are currently 7 directors of the company. At this meeting, 7 directors are proposed for election. Out of the 7 direct nominees, 6 are currently serving on the Board and 5 were elected by the shareholders at the Annual General Meeting of Shareholders held on June 13, 2025. Mr. Torsten Greif was just recently appointed to the Board, and the company is proposing each of Mr. Greif and Ms. Faith Charles for election as directors of the company for the first time.

Mr. Mitchell Kahn is not being nominated for reelection at the meeting. On behalf of the Board of Directors of the company, I would like to extend our most heartfelt gratitude to him for his service and dedication to the company over the last several years.

I now move to set the number of directors on the Board of Directors of the company at 10. In accordance with the articles of the company, the Board will have the discretion to select suitable candidates and appoint them as directors of the company to fill in the 3 vacancies that will remain following the meeting. As such, directors will hold office until the next Annual General Meeting of the Shareholders or until they are otherwise replaced.

The motion is now on the floor. Is there any discussion on the motion? As mentioned at the beginning of this meeting, voting today is conducted by a single electronic ballot and voting is now open on all matters to be presented at the meeting. Unless there are any questions or discussions, we will continue with the next items of business.

The next matter to be acted upon is the election of 7 individuals to the Board of Directors. The term of office of the directors is from today until the next Annual General Meeting of Shareholders or until such time as their successors have been duly elected or appointed. The circular contains information on each of the 7 nominees recommended for election as directors.

As outlined in the circular, the following individuals have been nominated to hold office until the close of the next Annual General Meeting of the Shareholders or until their successors are duly elected or appointed. They are: Boris Jordan, currently the Chair of the Board and the Chief Executive Officer of the company; Joseph Lusardi, currently the Executive Vice Chair of the Board; Michelle Bodner; Faith Charles; Torsten Greif; Karl Johansson; and Shasheen Shah. Each of these persons nominated has confirmed that he or she is prepared to serve as director. Each of them qualifies to serve as a director under the provisions of the British Columbia Business Corporations Act.

Given that no nominations were received in accordance with the provisions contained in the company's articles, I declare the nominations to be closed. I move to nominate the directors as set forth in the circular.

The motion is now on the floor. Proxies have been solicited for each of the 7 proposed qualified persons listed in the circular. The form of proxy for voting on the election of directors sets out each proposed nominee separately and allows shareholders to vote for each director individually. Is there any discussion on the motion?

I'll now move to the next item of business. The next item of business is the appointment of the auditors of the company for the ensuing year and to authorize the directors of the company to fix the remuneration of the auditors. BDO USA, P.C. have been first appointed as auditors of the company effective as of May 6, 2026, following the resignation of PKF O'Connor Davies, LLP, the previous auditors of the company having served as auditors from August 9, 2022, until May 6, 2026. The Audit Committee and the Board have approved, subject to shareholder approval, the appointment of BDO as auditors of the company. I move that BDO USA, P.C. be appointed auditors of the company until the next Annual General Meeting of Shareholders and that the directors be authorized to fix their remuneration. Is there any discussion on the motion?

I'll now move on to the next item of business. The next item of business is a resolution to approve the continued ability of the company to issue awards under the company's 2018 Stock and Incentive Plan as amended from time to time, including the approval of unallocated awards thereunder. Such resolution being referred to as the LTIP resolution.

As required by the rules of the Toronto Stock Exchange, all unallocated options, rights or other entitlements under a security-based compensation arrangement, which does not have a fixed maximum aggregate number of securities issuable must be approved by a majority of the company's security holders every 3 years. Given that the company's Stock and Incentive Plan is a rolling 10% or evergreen plan, the company is seeking shareholder approval of the company's rolling plan and of all unallocated awards issuable thereunder in accordance with the TSX Company Manual.

The full text of the LTIP resolution is set out and reproduced in Appendix B of the circular, and a summary of the LTIP resolution can be found on Page 37 and following of the circular. To be adopted, the LTIP resolution requires the affirmative vote of not less than the majority of the votes cast by shareholders present in person or represented by proxy and entitled to vote at the meeting. Unless there is an objection, I will dispense with the reading of the full text of the LTIP resolution, which can be found at Appendix B of the circular. I now move that the LTIP resolution be approved. Is there any discussion on the motion?

I will now move to the next item of business. The next item of business is a special resolution for the purpose of adopting an amendment to the articles of the company. The proposed amendment would amend the share capital of the company such that the automatic conversion feature of the dual-class share structure of the company pursuant to which the multiple voting shares would automatically convert into subordinate voting shares on a one-to-one basis on the date following the listing of the subordinate voting shares of the company on the NASDAQ Stock Market, New York Stock Exchange or another exchange or marketplace approved by the Board of Directors would be removed from the articles of the company.

The full text of the special shareholders resolution approving the proposed amendment and amending the articles of the company is set out and reproduced in the Appendix C of the circular, and a summary of the proposed amendment can be found on Page 39 and following of the circular.

Due to the requirements of the British Columbia Business Corporations Act, the articles of the company and relevant Canadian securities laws, the amendment resolution must be approved by at least 2/3 of the votes cast at the meeting by all holders of the subordinate voting shares and multiple voting shares present in person or represented by proxy voting together as a single class; at least 2/3 of the votes cast at the meeting by all holders of multiple voting shares present in person or represented by proxy voting as a class; at least 2/3 of the votes cast at the meeting by all holders of the subordinate voting shares present in person or represented by proxy voting as a class; and for the purpose of confirming the requisite minority approval under relevant Canadian securities laws has been obtained, a majority of the votes cast at the meeting by the holders of subordinate voting shares, excluding the votes attached to the subordinate voting shares beneficially owned or over which control or direction is exercised by Boris Jordan, Chairman and Chief Executive Officer of the company, or by related parties of Mr. Jordan and persons acting jointly or in concert with Mr. Jordan, including affiliates and associates, if any.

It should be noted that assuming the proposed amendment is adopted, the substance of the proposed amendment will be incorporated in the certificate of incorporation by which the company will be domiciled as a Delaware company pursuant to the plan of arrangement, which will be the last item of business at today's meeting.

Unless there is an objection, I will dispense with the reading of the full text of the special resolution approving the proposed amendment, which can be found at Appendix C of the circular. I now move that the proposed amendment be approved. Is there any discussion on the motion?

I'll now move to the next item of business. The next item of business is the resolution for the purpose of approving the implementation of a proposed exchange program, whereby up to 10,070,478 of the company's currently outstanding stock options having an exercise price or subject to performance vesting conditions tied to a trading price equal to or exceeding USD 5 would be exchanged for the restricted share units of the company. A summary and the full text of shareholders' resolution approving the option/RSU exchange is set out and reproduced on Page 47 and following of the circular.

Due to requirements under the applicable stock exchange rules and applicable securities legislation, the option/RSU exchange must be approved by: one, a simple majority of the votes cast by the holders of the subordinate voting shares and the holders of multiple voting shares voting together as a single class; and two, as it relates to the participation of the insiders of the company in the option/RSU exchange, a simple majority of the votes cast by the holders of subordinate voting shares and the holders of multiple voting shares voting together as a single class, excluding the votes attached to subordinate voting shares and multiple voting shares held or over which direction of control is exercised directly or indirectly by insiders of the company who are eligible holders being Boris Jordan, Chairman and Chief Executive Officer; Joseph Lusardi, Executive Vice Chairman; Ed Kremer, Chief Financial Officer; Peter Clateman, Chief Legal Officer; and Camilo Lyon, Chief Investment Officer.

Unless there is an objection, I will dispense with the reading of the full text of the option/RSU exchange resolution, which can be found on Page 47 and following of the circular. I now move that the option/RSU exchange be approved. Is there any discussion on the motion?

I will now move to the last item of business. The last item of business in the special resolution -- is a special resolution for the purpose of approving the plan of arrangement under Section 288 of the Business Corporations Act, British Columbia, involving, among other things, the continuation of the company out of British Columbia, Canada, to the state of Delaware in the United States and maintaining the same corporate name, Curaleaf Holdings, Inc. The continuance would have the effect of subjecting the company to the laws of the state of Delaware as if it had originally been incorporated in the state of Delaware and the company adopting new charter documents and bylaws, including the new authorized capital structure contemplated in such charter documents.

Upon completion of the continuance, among other things, each issued and outstanding subordinate voting share of the British Columbia-formed Curaleaf will be deemed to represent one share of subordinate voting common stock of the Delaware-continued Curaleaf. The same treatment will apply to each issued and outstanding multiple voting share and exchangeable share of the precontinuance Curaleaf, which will, for all purposes, be deemed to represent, respectively, one share of multiple voting common stock and one share of exchangeable common stock of the Delaware continued Curaleaf.

Furthermore, each outstanding option to purchase subordinate voting shares and each outstanding restricted share unit to receive subordinate voting shares will, for all purposes, be deemed to be adjusted pursuant to the terms of the Curaleaf 2018 Stock and Incentive Plan as amended to become, respectively, one outstanding option to purchase an equal number of Delaware subordinate voting shares and one restricted stock unit to receive an equal number of Delaware subordinate voting shares in each case on the same terms and conditions and set forth in the Curaleaf 2018 Stock and Incentive Plan and the applicable award agreement.

The plan of arrangement is in the form attached as Appendix E of the circular. The new charter documents being the certificate of domestication, the certificate of incorporation and the bylaws are in the forms attached as Schedules A, B and C, respectively, to the plan of arrangement.

Given the results of the voting on the proposed amendment, note that the certificate of incorporation included in the circular will be the version that reflects the substance of the proposed amendment. The full text of the special shareholders' resolution approving the plan of arrangement is set out and reproduced in Appendix D of the circular and a summary of the resolution and the plan of arrangement can be found on Page 50 and following of the circular.

The resolution must be approved by at least 2/3 of the votes cast by holders of subordinate voting shares and the holders of multiple voting shares voting as a single class present in person or by proxy at the meeting. Unless there is an objection, I will dispense with the reading of the full text of the special resolution approving the plan of arrangement, which can be found in Appendix D of the circular. I now move that the plan of arrangement be approved. Is there any discussion on the motion?

As previously mentioned, voting today is conducted by a single electronic ballot. Voting opened at the beginning of the formal part of the meeting for all business items. If you have not yet cast your vote in respect of each of today's business items for this meeting, please do so now.

Please register your vote by accessing the voting page when prompted and by pressing on the for or against buttons next to the resolutions: setting the number of directors at 10; two, approving the continued ability of the company to issue awards under the company's 2018 Stock and Incentive Plan as amended from time to time, including the approval of unallocated awards thereunder; three, approving the amendment to the share capital of the company; four approving the option/RSU exchange program; and five, approving the plan of arrangement. And by pressing on the for or abstain buttons next to the resolutions relating to the election of the 7 proposed directors and next to the resolution with respect to the appointment of BDO as auditors of the company and authorizing the Board of Directors to fix their remuneration.

Once the electronic balloting closes, the voting page will disappear and your votes will automatically be submitted. We will wait a few minutes for the completion of the electronic ballots and then move on with the remainder of the meeting. We will provide registered shareholders and duly appointed proxy holders approximately 1 minute to complete the electronic ballots. Once voting is completed, I would ask that the scrutineer compile the preliminary report on ballots regarding the preliminary results of voting on all business matters.

[Voting]

Now that voting is completed, we will take a short break of a minute or 2 so that the scrutineer can compile preliminary ballot results in respect of each business item. We will reconvene in a few moments with the scrutineer's preliminary ballot results.

[Break]

At this meeting, I am pleased to confirm the following. One, the number of directors of the company has been set at 10. Two, each of the 7 nominees have been elected as directors of the company to serve until the next Annual General Meeting of Shareholders or until their successors are elected or appointed. Three, the appointment of BDO USA, P.C. as the auditors of the company has been approved and the Board of Directors of the company has been authorized to fix their remuneration. Four, the resolution approving the company's Stock and Incentive Plan and the unallocated awards thereunder has been approved. Five, the proposed amendment to the articles of the company for the purpose of amending the articles of the company has been approved. Six, the resolution for the purpose of approving the option/RSU exchange has been approved. Seven, the special resolution for the purpose of approving the plan of arrangement, including the continuation of the company out of British Columbia, Canada, to the state of Delaware in the United States has been approved.

I direct that the results of the poll be included in the minutes of this meeting. We will announce the final results of the meeting in a press release in accordance with the policies of the TSX and file the press release on SEDAR+ following completion of the meeting.

If there is no further business to be brought before this meeting, I move that the formal portion of today's meeting be concluded, and I now declare the formal part of the meeting closed.

We will now open the floor for a question-and-answer period. I ask that all attendees who would like to ask a question use the instant messaging feature of the virtual platform to do so. We will answer as many questions as time permits. When asking your question, please state your name, the entity you represent, if any, and confirm you are a registered shareholder or a duly appointed proxy holder. Please limit your questions to topics relating to today's subject matter and keep your questions short and to the point.

We will now give attendees a brief moment to type in their questions. For each question we answer, we will summarize the question. We would like to remind you that the questions which were already answered or that are redundant or repetitive will not be answered.

There being no questions, we are now concluding the question-and-answer portion of this meeting. On behalf of management, our Board of Directors and our employees, I would like to take the opportunity to thank everyone for attending the meeting today. I would like to thank all of our shareholders for their commitment and continued support. We look forward to your attendance again next year. We encourage all shareholders to regularly consult with the investor presentations that we published at the Investor Relations section of our website at www.curaleaf.com.

Good afternoon, and welcome to the Curaleaf Holdings, Inc. First Quarter 2026 Conference Call. [Operator Instructions] Please also note, today's event is being recorded.

At this time, I would like to turn the floor over to Camilo Lyon, Chief Investment Officer. Sir, please go ahead.

Good afternoon, everyone, and welcome to Curaleaf Holdings First Quarter 2026 Conference Call. Today I'm joined by Chairman and Chief Executive Officer, Boris Jordan; President, Rahul Pinto; and Chief Financial Officer, Ed Kremer.

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 securities 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 that were applied in drawing a 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 SEDAR and EDGAR.

During today's conference call, in order to provide greater transparency regarding Curaleaf'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 Jordan. Boris?

Thank you, Camilo. Good afternoon, everyone, and thank you for joining us to discuss our first quarter results. 2026 is off to a strong start across macro, fundamental, and regulatory landscapes. And more importantly, we are seeing a clear shift in the trajectory of our business and the industry. The macro headwinds that constrained growth over the past 3 years are now beginning to turn into meaningful tailwinds. In the U.S., consumer spending remained healthy in the first quarter. However, we are closely monitoring current inflationary pressures. Stronger income tax refunds versus last year have supported spending power to the benefit of robust cannabis sales, reinforcing the resilience of underlying demand even in the face of higher gas prices.

At the same time, we believe the anticipated hemp ban is already benefiting the regulated market. Alcohol retailers have begun destocking hemp-derived products, and we expect that trend to accelerate as we approach the November 11 hemp ban implementation deadline, driving consumers back into the regulated channel, increasing traffic, and further strengthening the position of skilled operators like Curaleaf.

From a fundamental standpoint, our strategy is delivering. The investments we've made in the core pillars of our Built for Growth framework, customer centricity, brand building and operational excellence are translating directly into tangible P&L performance. First quarter revenue of $324 million grew 6% year-over-year, exceeding both our guidance and internal expectations. Our domestic and international segments grew 2% and 35%, respectively, underscoring the durability of our core business and the strength and scalability of our global platform. Without question, Curaleaf International is a key differentiator and an increasingly important driver of long-term value.

Gross margin was 49% and adjusted EBITDA was $63 million or 20% margin, including a 170 basis point drag from our international as we continue to invest in driving growth and market share gains abroad. We ended the quarter with $106 million in cash on the balance sheet. Net income from continuing operations was $70 million or $0.09 per share compared to a net loss of $50 million or $0.09 per share last year. We also continued to strengthen our balance sheet. We reduced our acquisition-related debt by $9 million and successfully refinanced our $475 million senior secured note with an oversubscribed $500 million 3-year facility backed by strong demand from both new and existing investors. This transaction is a clear signal of investor confidence in our strategy, execution, and credit profile.

Additionally, we completed the buyout of the remaining 45% minority interest in our German subsidiary, Four 20 Pharma, bringing our ownership of Curaleaf International to 100%. Based on a recent comparable public market transaction, the implied value of Curaleaf International is approximately $1 billion, highlighting the significant embedded value within our global platform that we believe is not yet fully reflected in our current valuation.

The U.S. cannabis industry has now entered what we believe is the most important regulatory inflection point in 55 years. Two weeks ago, under the direction of President Trump, Acting Attorney General Todd Blanche, formally rescheduled medical cannabis from Schedule I to Schedule III, while simultaneously restarting the broader rescheduling process with an ALJ hearing set to commence on the June 29 and conclude no later than July 15.

This dual-track approach is deliberate, designed to move with urgency while ensuring a durable and legally sound outcome. The practical and financial implications are highly transformative to the industry. First, federal funding for medical research will be allowed. Our U.K. team has been conducting research in concert with Imperial College in London on cannabis-derived solutions for neuropathic pain. We plan to share this research with the DEA and FDA while also leveraging our partnership with the University of Pennsylvania, whose cannabis research we also support under our special research license. Access to cannabis research should shed light on the medicinal properties of the plant and further remove the stigma that cannabis carries.

Second, the removal of 280 taxation on medical cannabis expected to be retroactive to at least January 1st, immediately unlocks meaningful balance sheet benefits. 60% of Curaleaf's business is medical and stands to get substantial 280E relief. When the adult-use process concludes, which we expect later this summer, these benefits should extend across the adult-use portion of our business as well. The remaining open question relates to the IRS look-back period for retroactive 280E relief, and we expect further clarity in due course.

Equally important, the DOJ's order opens an unexpected step that reforms medical cannabis beyond Schedule III. The order provides that we can get DEA licenses for our medical cannabis businesses, which would make our business fully legal under the CSA. In fact, earlier today, we filed applications to register with the DEA. Proceeds from the CSA cannabis cannot be deemed money laundering. The practical implications of this are yet to be seen, but we and the industry are racing to explore increased access to banking, financial services, and credit card use for our medical cannabis business.

Normalized banking relationships and, critically, the ability to accept major credit cards would remove friction at the point of sale, improve conversion, lower transaction costs, continuing the normalization of the consumer experience. It would also improve cash management and expand access to credit, representing another meaningful step change in profitability and scalability for Curaleaf. Our adult-use business may also benefit from increased access to financial services when the expected adult-use rescheduling happens later this year. Furthermore, after adult-use rescheduling, the probability of uplifting to a major exchange meaningfully increases once guidance from treasury is provided later this year.

With the glass ceiling now broken, we are seeing increased momentum at the state level as non-cannabis states, including North Carolina, South Carolina, Tennessee, and Indiana are actively exploring medical programs. Importantly, the upside here goes well beyond tax relief and banking access. The DOJ framework introduces a catalyst from which Curaleaf is particularly well-positioned to gain. The issuance of DEA licenses to state legal cannabis operators makes them compliant providers of cannabis under the CSA and the international treaty. This opens the door for us to participate in import and export transactions. A real import-export market will require permits from the DEA and many states have already indicated that they would support both exports and interstate commerce.

For Curaleaf, this represents a significant and highly strategic opportunity. We already have built one of the largest and most sophisticated cultivation manufacturing footprints in the United States. This established network of facilities positions us to supply our international operations with domestically grown products dramatically improving margins and strengthening control over our supply chain. Today, we produce approximately 20% of our product we sell internationally. That leaves a substantial opportunity to vertically integrate, expand margins, and unlock incremental profitability at scale while further leveraging our existing domestic infrastructure. Interestingly, in the U.S., the mix has flipped. We produce approximately 80% of our own products and by 20% third-party products. Put simply, we believe we're uniquely positioned not just to benefit from the regulatory shift, but to lead the next phase of industry growth.

Curaleaf International delivered a strong start to the year with revenue growing 35% year-over-year, ahead of our internal expectations. Performance was led by continued momentum in Germany and the U.K. with early signs of recovery in Poland. In Germany, after a soft January, reflecting accelerated pharmacy stocking late last year, sales rebuilt through the quarter and March was our strongest month, a positive setup heading into quarter 2. In the U.K., consistent with patient growth at Curaleaf Clinic more than offset competitive pricing dynamics and patient fees.

Margins were pressured this quarter as we worked through transitional dynamics in our international supply chain. Prior to the recent U.S. rescheduling developments, we had been evaluating meaningful CapEx to expand our international cultivation footprint. We are now reassessing that investment in light of a more compelling alternative, leveraging our domestic cultivation assets and award-winning U.S. genetics to supply international markets. We would not only avoid significant CapEx, but also unlock meaningful gross margin expansion as we scale.

Looking ahead, we remain optimistic that Spain, France, and Turkey will begin contributing in 2027 as those programs finalize their frameworks. And importantly, U.S. rescheduling could act as a catalyst for other countries to embrace medical cannabis. We're actively monitoring each market, and we'll share more as visibility increases.

With that, I'd like to hand the call over to our President, Rahul Pinto, to discuss our U.S. strategy and operations. Rahul has been with us for nearly a year, bringing his CPG experience from Pepsi and Albertsons to Curaleaf and has already made impact on the business. Rahul?

Thank you, Boris. Our domestic business grew 2% year-over-year. And more importantly, we are seeing clear proof points that our strategy is working. The 3 pillars of our Built for Growth framework, customer centricity, operational excellence and brand building are coming together to create a durable and scalable foundation for growth. We saw the clearest early success in Florida, where we implemented the strategy first. By improving flower quality and strain diversity, introducing new products, aligning assortment with demand and delivering a seamless customer experience, we drove 15% transaction growth year-over-year, more than offsetting price compression. We have now taken this playbook and are deploying it across other key markets, including Utah, Ohio, and Pennsylvania, with similarly encouraging early results. Ultimately, our entire network of states will benefit from these actions.

Let's discuss the pillars of our Build for Growth strategy, beginning with the first, customer centricity. Our R&D efforts have always started with a deep understanding of our consumer, and that focus continues to drive meaningful insights and innovation. Briq 2, which launched in March, is a clear example, addressing key consumer pain points like clogging while enhancing the overall experience through flavor protection technology and meter mode intelligence, providing a measurable draw each time.

Soon, the flavor series and legacy series of Briq 2 strains will be complemented by the live series consisting of live resin and rosin to round out the portfolio. Similarly, the launch of Dark Heart last month establishes a new benchmark in ultra-premium flower. With best-in-class genetics, limited drops, and disciplined distribution, the brand is driving strong full price sell-through and reestablishing Curaleaf as a leader in the premium segment.

Second is operational excellence, which speaks to delivering consistent improvements across our business as we've seen in our cultivation facilities and more recently, in our retail store experience. By matching retail assortments with customer demand and optimizing pricing, we are driving steady gains in key metrics such as traffic and units per transaction. These incremental improvements are compounding into meaningful financial performance.

Third is brand building, which is critical to long-term staying power as the market evolves. In Select, we've simplified the product architecture to clearly communicate its value proposition, and we're seeing positive consumer reception that will add to its market-leading position. We are also investing in trade marketing, elevated visual merchandising in partner doors with encouraging results as domestic wholesale grew 19% this quarter.

At the same time, we're expanding distribution with a disciplined focus on profitable growth. For example, last month's takeover of the travel agency in New York showcased our brands across both physical and digital channels, delivering outstanding results by significantly increasing traffic and AOV, benefiting both Curaleaf and the travel agency. As the industry scales, we believe leading brands will capture disproportionate share.

Today, according to Hoodie Analytics, the Curaleaf portfolio holds a top share position with Select maintaining the #1 position in vapes, and we see substantial opportunity to expand on that leadership. When these 3 strategic pillars come together, they create a powerful flywheel, driving repeatable revenue growth, margin expansion, and increasing returns over time.

I'll close by recognizing that these results and the opportunity ahead are a direct reflection of the execution, discipline, and commitment of our over 5,000 member team across the organization. As we look forward, we believe the 3-year down cycle the cannabis industry has navigated is now turning upward. The combination of improving fundamentals, accelerating regulatory momentum, and our scaled global platform positions us exceptionally well for what comes next. We thank President Trump for delivering on his commitments, turning promises into tangible results. Promises made, promises kept. Alongside acting AG Blanche, he achieved what others had started but weren't able to complete. As a result, patients, consumers, Curaleaf, and the burgeoning cannabis industry are meaningfully better today.

With that, I'll turn the call over to our CFO, Ed Kremer. Ed?

Thank you, Rahul. Total revenue for the first quarter was $324 million, a 3% sequential decline compared to the fourth quarter due to normal seasonality and increased 6% compared to the same period last year. Strength in Ohio, Curaleaf International, New York, Utah, and Massachusetts was offset by challenges in Nevada and Illinois.

By geography, our domestic segment grew 2% year-over-year with retail contracting 2%, which was more than offset by 19% year-over-year growth in domestic wholesale. International revenue grew 35% year-over-year, beating our internal plan, driven primarily by Germany and the U.K. By channel, total revenue was $231 million, flat to the first quarter of 2025, while strength in wholesale increased 21% year-over-year to $90 million, representing 28% of total revenue. The growth in wholesale was driven by strong performance in New York, Massachusetts, Ohio, and solid growth in Curaleaf International.

Our first quarter gross profit was $157 million, resulting in a 49% gross margin, a decrease of 220 basis points compared to the prior year period. The primary drivers of this contraction were price compression and discounts, partially offset by continued cultivation efficiency gains and disciplined labor expense controls. Our domestic gross margin was 50%, flat with the fourth quarter, underscoring the stabilization we're seeing in our U.S. business. While price compression remained present in most of our markets, we continue to find ways to offset that impact through cultivation efficiencies, product innovation, and selective price increases in states where demand is outstripping supply.

Notably, we have recently begun to see the rate of price compression decelerate. International gross margin was 42%, a decrease of 190 basis points sequentially, driven by pricing pressure in our U.K. business and in German flower and lower service volume sales, which carry a higher margin. SG&A expenses were $113 million in the first quarter, an increase of $7 million from the year ago period. Core SG&A was $108 million, an increase of $5 million from the prior year. The year-over-year increase in our core SG&A primarily reflects international expansion, additional headcount, and new store openings in Florida and Ohio.

Core SG&A was 33% of revenue in the first quarter, a 35 basis point decrease compared to the prior year due to leverage on stronger sales. First quarter adjusted EBITDA was $63 million, a decrease of 4% compared to last year, while adjusted EBITDA margin was 20%, inclusive of a 170 basis point drag from international, a decrease of 200 basis points versus last year.

First quarter net income from continuing operations was $70 million or $0.09 per share compared to a net loss of $50 million or negative $0.09 per share in the year ago period. During the quarter, prior to the rescheduling news, we completed a routine tax review with external counsel based on new information that came to light in which we determined that certain tax positions in previous years met the more likely than not standard required under ASC 740. This conclusion allowed us to release a significant portion of our previously recorded tax reserves and accrued interest from our balance sheet. These positions will also reduce our uncertain tax position liabilities going forward. Separately, following the Treasury and IRS guidance on medical cannabis rescheduling, we expect to recognize additional 280E tax benefit in future periods.

Now turning to our balance sheet and cash flow. We ended the quarter with cash and cash equivalents of $106 million. Inventory increased $16 million or 7% compared to the fourth quarter due to planned inventory builds in anticipation of our breakthrough and Dark Heart launches, coupled with inventory stocking ahead of 4/20 holiday. Capital expenditures in the first quarter were $17 million. And for 2026, we continue to expect capital expenditures to be roughly $80 million. We generated first quarter operating free cash flow from continuing operations of $21 million and $4 million, respectively, largely due to the aforementioned inventory investments ahead of 2 product launches. We expect operating cash to build as the year progresses, consistent with the cadence of our business. Our outstanding debt was $565 million. During the quarter, we reduced our acquisition-related debt by $9 million and completed the refinancing of our $475 million note with a 3-year $500 million note.

Before moving on to guidance, I'd like to announce that we are transitioning independent audit partners to BDO. BDO is the fifth ranked global accounting firm known for its expertise, innovation, and global reach. The move reflects our commitment to strengthening transparency, enhancing financial oversight and aligning with the best-in-class partners who can support our continued growth. Notably, we are the first in the cannabis industry to make this shift, setting a new benchmark for operational excellence and forward-thinking leadership. By partnering with a firm of BDO's caliber, we're positioning ourselves to navigate an increasingly complex business landscape with greater confidence and precision as we get closer to U.S. exchange uplisting.

I want to extend my sincere thanks to our accounting team for their exceptional work in making this transition possible. This achievement is a direct result of their dedication, expertise, and tireless efforts. And I'd like to thank PKF for their support and partnership over the past 7 years.

Now on to our outlook. While we are experiencing strong increases in traffic due to the many initiatives we have in place, we are closely watching the impact higher energy prices will have on our consumers' disposable income as inflationary pressures rise. Taking these macroeconomic factors into account and assuming current market conditions persist, we expect total revenue for the second quarter to increase 2% to 3% sequentially from the first quarter, which at the midpoint implies approximately $333 million.

And with that, I'd like to turn the call over to the operator to open the line for questions.

[Operator Instructions] Our first question today comes from Aaron Grey from Alliance Global Partners.

Nice to see that growth continue on international. I know it's decelerated a bit from 2025. So first off, I would just love to hear in terms of your outlook for growth for international for 2026. And then second, for us, in terms of your prepared remarks for potential exports in the U.S. to international. Just any color you could give potentially on timing? And then as we think about whether or not the existing cultivation footprint would suffice or potentially you'd want to acquire just given the climate that your current cultivation is in and also the potential for the need for EU-GMP and GACP. Thank you.

Thank you for that question. Let me first start with the international supply chain. As everyone knows, the international supply chain has been very difficult for everybody in the sector. A lot of cultivators aren't producing the type of flower that passes very strict EU-GMP regulations. And therefore, we have been looking both in Canada, mostly in Canada for increasing our own production, our own growing of product to ship to the international markets.

However, this recent rescheduling, the language and the rescheduling really has given us pause because we can use our U.S. infrastructure. The timing of that, we don't know. It very explicitly says that we should be able to. Upon my return from Europe, I'm in Europe now, upon my return from Europe, I plan to spend some time in Washington meeting with the DEA as well as the DOJ to see what the timing could be. But because we're deemed once we submit our application, we were deemed rescheduled from Schedule I to Schedule III, in theory, we could start very quickly. We do need state cooperation as well. We need export permits from them. So there will be some time. So I really expect not to be able to do this probably until the end of the year, and we'll see at that point in time.

Sorry, what was the first question that you had?

Just outlook for international growth for 2026.

Yes. International growth, I think we mentioned in the last call, we're looking at around 25% to 30% growth internationally this year, reduced down from over 50% last year due to no new markets. We expect that to accelerate significantly going into 2027.

Our next question comes from Bill Kirk from ROTH.

During the prepared remarks, Rahul gave transaction numbers for the quarter. I think he said plus 15% year-over-year, I believe, was how he said it. What is that on a same-store sales basis? And how has that number for the transaction growth year-over-year, how has it been trending the last couple of quarters?

Rahul?

Sorry. From a same-store sales basis, we're not going to comment on that, but the trends are moving in the right direction in general. And we will be able to talk about that on the next cycle. But overall, as we look at transactions, they are moving up and they are eclipsing right now the price compression that we see in the marketplace.

And then a separate kind of follow-up question. We've seen some comments today or some reported comments out of Senator Tim Scott about banking. I guess my question would be, how much of what we need to see or want to see from here requires some sort of congressional action versus things that can be done by the administration and the agencies who appear to be pretty well aligned.

So I'll take that. I think that we knew that Senator Scott was going to say this as a matter of fact, I think last year on several of the various podcasts and things I did, I mentioned that Senator Scott had said that once we got rescheduling as Chairman of the Feds Committee, he would move SAFE banking. So we do expect him to do that. I think we'll probably see that in the third quarter, most likely. I don't think it will fit the agenda for the second quarter. And maybe we could even get a vote before the midterm elections. I don't know, but certainly, I think we could get a vote before year-end. It's a very popular issue. As you know, it's passed the House many, many times. I suspect that it will pass the Senate now. It seems to be more bipartisan today than it was under the previous Senate. The main person blocking it was Senator McConnell. As we know, Senator McConnell is retiring in 2027. So I do expect that SAFE Banking should be able to make it through.

However, there is a chance also that we could get guidance from like the crypto industry did, guidance from FinCEN and from Secretary Bessent that would indicate that the banking industry could start to serve the sector. However, I believe that that will be good enough for certain institutions, but I believe other institutions will want to see some level of legislation because as we all know, one presidential administration to another could change the view. And so ramping up banking operations to then have to shut them down if the next President, for instance, had a different view or the next Attorney General or Finance Minister had a different view, Secretary. I think that they'll want to see -- certainly, money center banks, I believe, will want to see safe banking legislation go through before they get involved.

But I do think a lot of other financial institutions, including credit card companies and midsized regional banks, I think, as well as, for instance, credit working capital facilities, things like that can open up with a simple guidance from FinCEN and the treasury.

Congratulations, guys.

Our next question comes from Kenric Tyghe from Canaccord Genuity.

This is at least the second quarter I can recall where you've highlighted the lower price compression and better sort of domestic environment in terms of that price compression actually decreasing. Could you sort of speak to, one, how broad-based that lower promotional intensity is? And 2, Boris, the extent to which you think that, that hemp relief that you were calling out with alcohol retailers destocking and increased traffic into the regulated channel being a factor?

I think there are several factors that are driving our comments on price compression. The first one is Curaleaf has substantially over the last year and 6 months that I've been CEO, increased the quality of our products. We've rationalized our product SKUs. We've increased the quality of our flower substantially. And so we've been able to start to increase prices ourselves because of that. And so we're seeing better margins, both in our wholesale business and our retail business based on our own product quality.

The second thing I would say is there are certain markets in the U.S. I'll bring 2 as an example, Florida and Massachusetts that are starting to see stabilization in pricing, and we're not seeing the type of decline or maybe even any decline in those markets at this point in time. There are other markets, however, that are still compressing, but we are starting to see stabilization in certain markets. So overall, I would say that I'm getting a slightly better feeling that partially maybe because hemp products are starting to disappear even though we still have many hemp sellers still have until November. We definitely think that the supply chains are starting to break down. We think that there's less product availability. We think certain retailers are already starting to -- as they sell the inventory, they're not replenishing it. And so I think we are starting to see the only part of a recurrence in that. I don't believe that that will really hit until early 2027 when I do expect somewhere between 10% and 15% organic growth in the sector just based on the hemp shutdown.

Our next question comes from Frederico Gomes from ATB Cormark Markets.

Congrats on the great quarter here, guys. Just a question, more big picture on rescheduling. Obviously, we got the medical portion, and we're probably going to get the recreational portion in the second half. And we know about the impact. But could you talk about the potential impact that rescheduling could have on sales, margins, the overall competitive environment, M&A? I mean, could it accelerate consolidation? Would it maybe let some companies that are struggling, survive for longer? What do you think are some of the puts and takes here in terms of a post rescheduling world in the industry?

I think that it's too early to tell whether it will or won't have an impact on pricing. Let's be honest, most companies were not paying but accruing UTPs on their balance sheets. So I don't know yet whether we can talk about pricing changes in the marketplace at this point in time. I don't expect it to have a significant effect there.

I do, however, think that it will have a significant effect on consolidation and M&A. We're already seeing a tremendous amount of tuck-in acquisitions across the countries. Many companies have not announced them yet. But I can tell you, we know of literally probably 10 to 15 transactions that have been done in the last 2 quarters regionally, maybe they're waiting for approvals or something. And I do also expect, as I've said earlier, I do expect to see larger consolidations between MSOs as well. This is a very much a velocity business. A lot of these companies compete literally across the street from each other with stores. We're seeing more transactions and we're seeing transactions increasing. And with the price compression that happened with hemp, we're seeing less capacity availability and less product availability in markets and shortages of products in the regulated market.

And so by combining grow facilities, you're going to have massive cost savings and you're also going to have massive synergies to be able to provide the market with product and branding. And so I do think you're going to see -- it's a compelling story to see significant MSOs starting to merge on the back of 280E. I think you will see it because now you have certainty on the balance sheet. And so certainly, after we get the IRS guidance on 280E and we get hopefully the rescheduling of adult use in the second quarter, at that point in time, I do think that you're going to start seeing consolidation in the sector.

Our next question comes from Russell Stanley from Beacon.

Just around the scheduled hemp ban and efforts that start to interfere with the implementation date has so far fallen short. So I'd love to hear your confidence level that it will go into effect as scheduled. Do you see any risk to the date at this point?

Listen, I think that, obviously, the hemp industry is doing everything they can. We raised quite a bit of money and they're lobbying very aggressively. And so this is politics and it's Washington and never say never. But at the moment, as we speak right now, I can tell you, I believe there's very little appetite within the House and Senate to change the rules that they set last year at this early stage.

I do think, however, going forward, maybe a few years from now, I do think that you might get some changes, particularly around beverages, but I don't think you're going to get any changes here between now and November, no.

Our next question comes from Pablo Zuanic from Zuanic & Associates.

Two quick questions. One, in the past, Boris, you've talked about spinning off part of the international business. On the math you're giving of $1 billion, that's about 5, 6x sales. Your domestic business is staying around 2.5x. Is that still in the cards, especially with stocks, although they have moved up, stocks, they haven't moved up as much as we would have expected given all the good news. So if you can comment on that.

And then the second question, which is somewhat related, I know we are all, including myself, very excited about the news flow and about the fact that the companies are registered with the DEA will become federally illegal supposedly, but the product will remain federally illegal, right? And will that create a problem as we move forward trying to implement a lot of these changes. When I say federally legal, Iowa, Kansas, Indiana is still illegal there, right, for medical even. So I'm just trying to reconcile one or the other, an illegal product and a federally illegal company.

So the product -- medical product in those states where medical product is approved will be legal under federal law. And I believe many of the states will be passing medical cannabis legislation. We already know that at least 5 states that in the past have not even considered it that are ready now looking at passing medical cannabis legislation in those states. Some of the states you mentioned are part of that group that is looking at doing that. And so I do think that you'll have that. But under the CSA, you have to understand medical cannabis is going to be legal. So I want to stretch that point.

Under -- are plans are international. We always have that option if we want to do it. Right now, we'd like to see what happens with the rescheduling that we'll use in the second quarter. Our business if you take a look at Curaleaf, in fact if you add in our European business, 80% if our business is medical. And so if you combine the U.S. and the European business, 80% of our revenues actually come from medical. However, the impact of 280E will only impact our U.S. business, which is 60% medical. And so we have a lot of options available to us if we decide.

But at the moment, I'm assuming and hoping that as this legislation passes in the second quarter, I do think that at that point in time and as we get banking legislation, I do think at that point in time that you will have significant institutional interest in the sector. I have spoken to many large-scale investors, large long-only funds that manage trillions of dollars today, they cannot really look at this sector until they have one visibility into adult use, visibility into what effect that has on the balance sheet. And at that point in time, they need to start doing their research. They need to go to their compliance committees.

So I believe that it will take 6 to 12 months post final rescheduling for large institutional players to start participating in the market. And if that's the case, I don't see a reason for us to have to split the business up. However, I will never say never because the European business is growing very, very aggressively. I do believe our margins as we start to vertically integrate that business are going to improve also quite dramatically, obviously, helping the overall margin of the business because Europe is starting to become a bigger part of our business. And so we will take a look at things at the time that we feel necessary. Right now, I feel pretty good about keeping the business together.

And with that, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to Camilo Lyon for closing remarks.

Thank you, everyone, for joining us today. We look forward to speaking with you again in about 90 days. Have a great day.

And with that, ladies and gentlemen, we'll be concluding today's conference call and presentation. We thank you for joining. You may now disconnect your lines.

Good day, and welcome to the Curaleaf Holdings' fourth quarter and full year 2025 conference call. [Operator Instructions] 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 Curaleaf Holdings' 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 Kremer.

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 securities 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 that were applied in drawing a 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 SEDAR and EDGAR.

During today's conference call, in order to provide greater transparency regarding Curaleaf'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 Jordan. 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 6 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 on 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 consistency -- consistently higher quality flower 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 5 national pre-roll brand in its 4 launch markets: New York, New Jersey, Illinois and Arizona, demonstrating the strength of our innovation engine and brand-building capabilities.

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 3 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 I to Schedule III.

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 are already driving increased consolidation across the sector. We are seeing this primarily through asset sales by undercapitalized operators, targeted bolt-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 Curaleaf is one, with strong balance sheet, 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 opportunity set, last week, we completed the refinancing of our $475 million senior secured notes maturing on December 15, 2026 of which $457 million was outstanding, issuing a new $500 million senior secured note with a 3-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 Curaleaf 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 Our 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 the -- 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 are heading. During the quarter, the Curaleaf family of brands captured the #1 overall market share position according to Hoodie Analytics, with Select maintaining its #1 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 of 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 [ lease, net ] translating into tangible results.

Ohio continues to benefit from its transition to adult use, coupled with the successful ramp of 2 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 flower 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 #1 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 Briq 2.0, the next generation of our highly successful vape platform across 13 states. Building on the strong performance of Briq, 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.

Curaleaf 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 flower to the market, but also consumer demand remained robust for our portfolio of brands.

Our value tier brand, [indiscernible] continued to gain traction with cost-conscious patients, while our [ QMID ] 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 across both premium and value tiers to further leverage our strong market position. In the U.K., Curaleaf Clinic expanded its active patient count once again, reinforcing our #1 market share position. The U.K. 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 Four 20 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, enhances transparency around the performance and valuation of our International segment. This is particularly relevant in the 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 [indiscernible] in France and Turkey. Regulators in each country are actively advancing rule-making 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 form 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 start-up 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 Build 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?

Thanks, Boris. All my comments will reflect continuing operations, which exclude Hemp and Missouri, 2 business units we exited in the fourth quarter. Total revenue for the fourth quarter was $333 million, representing 5% sequential growth and a 2% increase compared to the same period last year. Strength was broad-based as most of our markets saw sequential growth led by Ohio, International, Florida and Pennsylvania. International revenue grew by 65% year-over-year, driven primarily by Germany and the U.K.

By channel, retail revenue was $237 million compared to $247 million in the fourth quarter of 2024, a decline of 4% year-over-year, partially offset by strength in wholesale, which increased 15% year-over-year to $91 million, representing 27% of total revenue. The robust momentum in wholesale was driven by market share gains in Curaleaf International, a strong recovery in Massachusetts, strong sell-through and reorders in Arizona and Ohio, all supported by the increased quality and product availability of our brands.

For 2025, total revenue was $1.27 billion. Retail revenue was $923 million, while wholesale revenue was $332 million. We opened a total of 9 new dispensaries, including 5 in Florida, 3 in Ohio and 1 in Maine. International revenue of $172 million grew by a very healthy 63% over 2024. The work our commercial and operations teams accomplished in 2025 resulted in the strong market share position we maintained throughout the year. In the fourth quarter, that work to prioritize high-quality flower culminated in the Curaleaf portfolio of brands reaching the #1 share position according to Hoodie Analytics data. What's more, Select continued to command the #1 vape share in the market.

Our relentless focus on quality and innovation are pillars for us to build long-term durable brands and consumers will see more of this innovation in 2026. Fourth quarter adjusted gross profit was $162 million, resulting in a 49% adjusted gross margin, an increase of 20 basis points compared to the prior year period. Continued productivity and efficiency gains in our cultivation facilities were the primary drivers of the margin expansion, partially offset by pricing pressure.

These gains were partially offset by price compression and higher utility expenses. For the year, our adjusted gross profit was $633 million, resulting in a 50% adjusted gross margin, an increase of 150 basis points compared to the prior year. SG&A expenses were $111 million in the fourth quarter, an increase of $11 million from the year ago period. Core SG&A, which excludes add-backs, was $107 million, an increase of $10 million from the prior year. The year-over-year increase in our core SG&A primarily reflects international expansion and new store openings in Florida and Ohio.

Core SG&A was 32% of revenue in the fourth quarter, a 260 basis point increase compared to the prior year due to aforementioned investments. For the year, SG&A and core SG&A was $428 million and $413 million, respectively. As a percent of sales, core SG&A was 33%. Fourth quarter net loss from continuing operations was $49 million or a loss of $0.06 per share. Excluding onetime noncash impairments of $6 million, adjusted net loss from continuing operations was $39 million or a loss of $0.05 per share.

For 2025, net loss from continuing operations was $202 million or a loss of $0.26 a share. Excluding onetime noncash impairments and other add-backs, adjusted net loss from continuing operations was $176 million or a loss of $0.23 per share. In the fourth quarter, adjusted EBITDA was $69 million, a decrease of 9% compared to last year. Fourth quarter adjusted EBITDA margin was 21%, a decrease of 260 basis points versus last year.

Our International segment profitability is improving. However, margins remain below the corporate average and thus weighed on fourth quarter EBITDA by 120 basis points. The year adjusted EBITDA was $275 million, and adjusted EBITDA margin was 22%, a decrease of 100 basis points compared to the prior year.

Turning to our balance sheet and cash flow. We ended the quarter with cash and cash equivalents of $102 million. Inventory increased $8 million or 4% compared to last year's fourth quarter due to growth in our International segment. Our domestic inventory decreased 2% compared to last year. Operating and free cash flow from continuing operations were $42 million and $25 million, respectively. For the full year 2025, we generated operating and free cash flow from continuing operations of $152 million and $89 million, respectively.

Capital expenditures in the fourth quarter were $17 million, bringing the total spend for the year to $63 million. The expenditures were driven by investments of facility upgrades, retail dispensary openings and IT infrastructure projects. For 2026, we expect capital expenditures to be approximately $80 million. The primary buckets of investment include international, automation, relocation and renovation of existing stores, coupled with at least 10 new dispensary openings in select locations, IT infrastructure and expenses associated with the relocation of our corporate headquarters.

Our outstanding debt at quarter end was $549 million. During the year, we reduced our acquisition debt by $57 million. Last week, we completed the refinancing of our $475 million senior secured note due December 2026 with a $500 million, 11.5% senior secured note due February 2029. This highly successful and oversubscribed transaction extends our maturities, gives us ample financial flexibility and allows us to fund the buyout of the put option for the remaining 45% of the Four 20 Pharma business in Germany, we did not own. Once that transaction is completed, we will own 100% of our international business.

Turning to guidance for the first quarter. Due to normal seasonality, we expect total revenue to be down mid-single digits sequentially from the fourth quarter. And with that, I'll turn the call back over to the operator to open the line for questions.

[Operator Instructions] And the first question will come from Aaron Grey with Alliance Global Partners.

Nice finish to the year for 2025. I want to talk a bit about pricing pressure and outlook. Boris, you spoke to another year of double-digit pricing pressure. So I want to get some color in terms of your outlook for 2026 on pricing, if you're starting to see some price stabilization in certain markets?

And then second part to that question, just relating to your comfort in terms of having levers available to offset the pricing pressure as we saw in 2025, albeit from your back to Roots initiative or yield improvements.

Aaron, thank you. Yes, we continue to see pricing pressure across most markets in the United States. And I think that, that will probably continue through the first half of the year. I do expect, however, as the hemp ban comes into play towards the end of the year, a stabilization in pricing across markets as what we're starting to see is a short -- in some markets, we're starting to see shortage of certain products. And I think that, that's led by the fact that hemp has been prevalent on shelves across the whole country. Slowly some of those products are starting to disappear. We're starting to see less advertising.

I think a lot of the C-stores are going to stop carrying a lot of these hemp products over the next several months. And as that happens, I think you will see a certain migration of customers over to the regulated market. We certainly think about 50% of the $25 billion estimated revenue of the hemp market will probably move over to the regulated market. That's largely the flower, vape and edibles part of the market, whereas we anticipate that beverage will probably stay within the hemp market and the structure that will be established for it.

But otherwise, we do start -- I think we will start to see a firming of pricing going into the year-end and probably maybe even some price moves higher going into 2027. In terms of our ability to fight those price compressions across markets, we are constantly focused on our efficiencies. We're getting more and more efficiencies out of our grow operations. We're doing a lot of improvements in both automation as well as in the grows themselves. We don't believe that we have squeezed every possible thing we can out of these efficiencies, and we do expect more of these efficiencies to come to fruition this year and feel comfortable that we'll be able to hold on to our margin profile that we have now.

The next question will come from Russell Stanley with Beacon.

Just on the international business, I'm wondering how you're thinking about margin expectations there in '26, given the drag in Q4 at 120 bps. Germany is continuing to scale nicely as a tailwind, but you've got multiple new markets that justify their own investment. So I'm wondering where you think the margin drag will be this year and next? Just wondering what your mind's eye is showing on that front.

So we anticipate European margins to stay basically flat to where they were this year. As our business scales, we do anticipate small improvements in those margins heading closer to the U.S. margins that we receive in the business. However, we think that it's probably a little bit early as we are continuing to invest in our new markets, as I said, France, Spain and Turkey, which is a drag and those markets will not hit -- will not start to revenue generate until at best the fourth quarter of this year and early next year.

So I think that as the business scales in 2027, margins will start to improve and start to get better closer to that 50% gross margin. But this year, we anticipate margins being at the same sort of level of 42% to 43% that we're achieving. However, I do want to say that we have the absolute best-in-class gross margins in the European market of any other operator in the market today. And so we're very proud of the way we operate our business in Europe. And those margins of Curaleaf are substantially better than all of our competition in European market. Using our U.S. experience in running the business and applying that in the European markets has helped us receive the best-in-class margins in Europe.

The next question will come from Bill Kirk with ROTH Capital.

What gives you guys confidence that the intoxicating hemp group won't be able to delay the ban or find some sort of reprieve? And then in states where you've effectively seen a ban already like Massachusetts, what have you seen in your dispensaries in Massachusetts as intoxicating hemp has gone away?

So again, I want to reiterate that the federal ban on hemp products is a 1-year ban from the time it was enacted in November of last year. And so even in Massachusetts, where you have local bans in other states as well, you still see those products because federally, those products are allowed to be sold in those markets. However, specifically in Massachusetts, Curaleaf, not directly related to the hemp ban, we have seen a marketable improvement in both margin and performance for Curaleaf in Massachusetts. However, in terms of our confidence, as you know, we spent an enormous amount of time in Washington down the hill, and we are hearing there is 0 chance that the Republicans are going to vote for an extension of the hemp ban at this point in time.

There may be some compromises around some of the medical programs that are going to play. And there may be, at some point, a compromise around beverage. But I can tell you that I think chances are pretty low on that right now. And at the moment, the Republican side of which controls both the House and the Senate at this point in time has no interest. And I believe today, there was more information that came out of Washington. They have no interest in voting on extension of the hemp program.

And the next question will come from Frederico Gomes with ATB Cormark Capital Markets.

Question is on the pricing environment in Germany and the U.K., Boris. Are prices holding up well in those 2 markets? Or do you see any sort of pressures coming there this year?

I think the growth profile in both of those markets are very early stage. I mean, Germany is still around $1 billion market. The U.K. is around 50,000 to 70,000 patients. These are very, very early-stage markets. So we anticipate growth to continue to be very, very strong in both of those markets going forward. If you think about it, Germany has a program that is less than half the size of Florida, and it's got 4.5x the population.

So we're not particularly concerned about the growth profile in these markets. However, there has been pressure on prices in both Germany and less so in the U.K., but it's starting in the U.K. But Curaleaf tends to operate at the upper end of the product segment. And so therefore, we've been able to hold on to our margins, given that our supply chain and our facilities that are available for us to move product are best-in-class, and we've been able to continue to hold on to our margins at the higher level.

Again, we think growth will help in the scalability of the business and therefore, holding margins. But we are seeing at the low end of the product portfolio, which we do not participate in, we are definitely seeing pricing pressures at the low end.

[Operator Instructions] Our next question will come from Kenric Tyghe with Canaccord Genuity.

Boris, if we look at this through the lens of the consumer, what were the biggest changes from your Return to Our Roots plan that supported the outperformance in key markets like New York, Ohio, Florida, Pennsylvania in the quarter. I mean, essentially, what you're speaking to here is an increased share of wallet in a very tough backdrop, which takes some doing. What were the changes that drove it? And how sticky do you think those changes will prove in the eyes of the consumer?

I think in Curaleaf's case, it was definitely product quality. We had a massive focus since I became the CEO 1.5 years ago on improving the product quality, also assortment and making sure that we have the right products in the right places at the right time. So between product quality and supply chain as well as being able to be more efficient in the manufacturing process and therefore, bringing down our cost base and the manufacturing of our products, all of those things contributed for us to be able to grow transactions.

And I think that with our marketing launches that you're going to start seeing here at the end of the third quarter going to the fourth quarter, a lot of revamps, we think we'll continue to see an improvement in traffic in not only our stores, but also through our marketing efforts, our products in third-party stores where we're wholesaling.

And this will conclude our question-and-answer session. I would now like to turn the conference back over to Mr. Camilo Lyon for any closing remarks. Please go ahead.

Thank you, everyone, for joining. We will talk to you again in May for our Q1 earnings results. Have a great night.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Curaleaf Holdings, Inc. Third Quarter 2025 Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Camilo Lyon, the Chief Investment Officer. Please go ahead.

Good afternoon, everyone, and welcome to Curaleaf Holdings Third Quarter 2025 Conference Call. Today, I'm joined by Chairman and Chief Executive Officer, Boris Jordan; and Chief Financial Officer, Ed Kremer.

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 securities 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 that were applied in drawing a 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 SEDAR and EDGAR.

During today's conference call, in order to provide greater transparency regarding Curaleaf'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 Jordan. Boris?

Thank you, Camilo. Good afternoon, everyone, and thank you for joining us to discuss our third quarter 2025 results. The return to our roots plan we initiated 12 months ago, which is focused on enhancing product quality, driving growth, expanding margins and optimizing cash flow is delivering tangible results.

Over the past year, we have completed significant foundational work to reset the business, leveraging our Dark Heart genetics program, investing in our supply chain and realigning our retail operations. These actions have positioned our domestic business for renewed growth while supporting rapid international expansion. I'm encouraged to report that we're seeing positive momentum across the organization despite ongoing macro pressure from price compression.

In the third quarter, we generated $320 million in revenue, up 2% sequentially. Price compression continued to be a headwind consistent with last quarter, yet our domestic segment remained stable and achieved modest growth. Our International segment continued its strong trajectory, delivering 12% sequential growth and 56% year-over-year growth. Adjusted gross margins improved to 50%, an increase of 115 basis points, both sequentially and versus the prior year. Adjusted EBITDA was $69 million, representing a 22% margin, inclusive of a 200 basis point drag from our international and hemp businesses.

Our balance sheet remains healthy with a quarter end cash position of $107 million after paying $28 million in principal and interest debt obligations. We generated $53 million in operating cash flow from our continuing operations and $37 million in free cash flow. Subsequent to quarter end, we made a $30 million in acquisition-related debt payments primarily to Tryke, thus completing our obligation and leaving approximately $70 million payable over the next 2 years. We also closed on an upsized $100 million revolving credit line with Needham Bank, giving us greater flexibility to manage our business and pay down more expensive debt.

The U.S. segment grew modestly compared to the second quarter, reinforcing the stability we've achieved and positioning the business for a return to growth. Many of our markets delivered solid sequential growth, including Ohio, New York, Utah and Massachusetts, partially offset by seasonal softness in Arizona, muted tourism in Nevada and an ongoing pressure in New Jersey.

We've made significant progress strengthening our supply chain, starting with cultivation. I can't overstate the improvement we've seen in our garden yields continue to rise across the network and potencies have steadily increased. This quarter, our average flower potency surpassed 30% for the first time in our history. That's a direct result of our team's focus, discipline and support from the Dark Hart Genetics team. Strong genetics, sound techniques and quality equipment form the winning formula we're now deploying across all markets.

On the retail side, we've implemented data-driven analytics tools that are improving assortment planning, merchandising and inventory flow. With better data quality, our teams are operating with greater precision and stronger discipline, driving better connectivity throughout the supply chain. As a result, customers are finding the right product in the right place at the right time and price, which is leading to higher visits, stronger loyalty and greater lifetime value.

To build on that momentum, we're leveraging our database of more than 2.1 million loyalty members to enhance customer engagement, deepen brand affinity and drive long-term sustainable demand. We're still in the early innings of this refreshed playbook with just 3 states onboarded, but the results are already starting to show.

On the innovation front, our new Anthem pre-roll brand continues to gain strong traction with both customers and retailers. Since its April launch, adoption rates and customer feedback have been exceptional. In our initial launch states, the response was overwhelmingly positive, and in Illinois, Anthem Classic has already become a top 10 pre-roll brand according to BDSA.

The brand is off to a fast start and continues to build awareness and momentum. To complement the Classic line, we introduced Anthem Bold, our infused pre-roll offering in September across New York, New Jersey, Illinois and Arizona. While early feedback has been outstanding, in Illinois, the addition of Anthem Bold to our in-store lineup has propelled Anthem to nearly 30% of total pre-roll sales while also expanding the overall category. We're seeing similar strength in other launch states.

Given the success, our operations team is rapidly scaling production to meet growing demand and support continued momentum. ACE, our proprietary aqueous cannabis extraction oil launched last quarter continues to gain strong traction with consumers. The message of an ultra-clear, ultra-smooth oil with minimal plant extract is resonating, driving solid sell-through and reorders in New York.

In Massachusetts, ACE is flying off the shelves, contributing to improved state performance. Next, we plan to introduce ACE in Florida, where we believe it has the potential to reshape the distillate market. Innovation remains at the core of our strategy and products like ACE are proving to be powerful drivers of traffic, customer engagement and sustainable growth.

The Curaleaf International segment delivered another outstanding quarter with revenue up 12% sequentially and 56% year-over-year, driven primarily by continued strength in the U.K. and Germany. In the U.K., sustained patient growth in our Curaleaf Clinic, coupled with solid wholesale performance reinforced our #1 market share position. In Germany, demand for our brands remained robust despite near-term challenges tied to regulatory delays in lifting import permit caps. That issue has now been resolved as import caps were raised last week, allowing the market plenty of supply headroom for the next couple of quarters.

In September, we launched the world's first medically certified liquid inhalation device, the QMID in the U.K. and Germany. Developed over several years in partnership with Jupiter Research, the QMID is currently the only Class IIa medical device of its kind available in the European market, offering patients precise and consistent dosing through advanced vaporization technology. Pharmacist feedback has been highly positive and adoption continues to grow across both markets. The device was recently approved for sale in Australia, and we expect continued momentum and strong patient uptake as awareness builds globally.

Now turning to new international markets. We're seeing encouraging progress across several key geographies. In Turkey, the government continues to advance its medical cannabis draft law, which could be made public in the coming months. In concert with that, we've begun the architectural design phase of our facility and remain on track for this market to go live in the second half of 2026.

In Spain, momentum is also building. In October, the Spanish Health Minister formally approved a measure authorizing the use of medical cannabis in hospitals. The government now has 3 months to publish a detailed monograph outlining the program parameters. We expect the market will initially focus on oil-based products, and we're well positioned for any outcome with our GMP-certified facility in Alicante, Spain and our strong partnership with the University of Alicante. We anticipate further clarity on next steps in early 2026.

France is similarly advancing its medical cannabis framework, which we expect will follow a model similar to that of Spain, beginning with hospital distribution. Importantly, there is work being done to allow for insurance reimbursements, which we believe would quickly usher in many patients into the market. We could see the market go live in the first half of 2026 with the help of our in-country partner, we are well positioned to optimize on the French opportunity when the timing is right.

Collectively, Turkey, Spain and France represent a combined population of more than 200 million people, offering a significant long-term runway for Curaleaf. While we're excited about the potential of these markets, we recognize they will take time to mature. As such, we do not anticipate meaningful revenue contribution commencing from these countries until 2027 and beyond.

Turning to our hemp business. We added several new distribution partners during the quarter and are moving quickly to expand our beverage brand portfolio. We expect to share additional updates on our next earnings call. Overall, we continue to prudently scale this segment while we await federal guidance that will help shape the long-term trajectory of this category.

With much of the foundational and restructuring work under our return to Roots program now complete, we are preparing to shift towards a growth mindset in 2026. We're cautiously optimistic that the early signs we're seeing today point to a strengthening domestic business. While we expect competition across our international markets to intensify, we're confident in the multiple growth drivers at our disposal to sustain robust performance next year.

We also remain encouraged by the continued progress towards federal reform, even if the pace is slower than anyone would prefer. I continue to believe the administration will ultimately deliver on its commitment to reschedule cannabis to Schedule III on its own timetable, but the direction remains clear and positive for the industry.

To our more than 5,000 employees worldwide, thank you for your dedication and hard work. The results we've shared today are a direct reflection on your focus, resilience and commitment to Curaleaf's mission. None of this would be possible without each and every one of you. We're energized by the opportunities ahead and remain steadfast in our mission to shape the future of cannabis responsibly and sustainably for patients, consumers and shareholders alike.

With that, I'll turn the call over to our CFO, Ed Kremer. Ed?

Thank you, Boris. Total revenue for the third quarter was $320 million, a 2% sequential increase compared to the second quarter and 3% decrease compared to the same period last year. Strength in Ohio, our International segment, New York and Utah was partially offset by pressure in Arizona, Nevada and New Jersey.

Our domestic retail metrics continued showing signs of stabilization in the third quarter as transactions increased 2%. That said, as consumers make trade up to larger value size formats, units per transactions and AUR decreased 2% compared to the second quarter. Price compression headwinds did not abate in the third quarter as all markets we operate in showed a low double-digit decline on average as compared to the third quarter last year.

By channel, retail revenue was $226 million compared to $253 million in the third quarter of 2024, a decline of 11% year-over-year, partially offset by strength in wholesale, which increased 19% year-over-year to $90 million, representing 28% of total revenue, driven by broad-based strength across most of our states with particular strength in New York, Connecticut, Illinois and Massachusetts as well as international.

By geography, domestic revenue was up slightly from the second quarter and declined 9% compared to the same period last year, largely driven by price compression as flower price per gram was down 10% and vape pricing was down mid-teens. Curaleaf International produced another robust quarter as revenue grew by 56% year-over-year, driven primarily by the U.K. and Germany businesses.

During the quarter, we made strategic investments in our international supply chain, unlocking additional capacity at our NGC facility to support strong demand in Germany. In Spain, we tripled oil production to enable the launch of new QMID device. These high-return investments are strengthening Curaleaf's presence in these emerging medical markets, further establishing our position as the global leader in cannabis.

Our third quarter adjusted gross profit was $160 million, resulting in a 50% adjusted gross margin, an increase of 115 basis points compared to the prior year period. The primary drivers of this expansion were cost reductions in our cultivation facilities, partially offset by continued headwinds of price compression and higher promotions. Sequentially, adjusted gross margin also expanded by 115 basis points.

SG&A expenses were $110 million in the third quarter, an increase of $4 million from the year ago period. Core SG&A was $105 million, an increase of $3 million from the prior year. The year-over-year increase in our core SG&A was driven by an increase in payroll expenses as we added strategic new hires and retail labor for our new stores. Core SG&A was 32.7% of revenue in the third quarter, a 200 basis point increase compared to the prior year.

Third quarter net loss from continuing operations was $54.5 million or a loss of $0.07 per share and adjusted net loss from continuing operations was $48.2 million or a loss of $0.06 per share. Third quarter adjusted EBITDA was $69 million, a decrease of 8% compared to last year, while adjusted EBITDA margin was 22%, a decrease of 115 basis points versus last year.

Our International segment was a 120 basis point drag on our total EBITDA margin in the quarter. As expected, our hemp business weighed on margins by 80 basis points as we invest in marketing, brand building and product development.

Now turning to our balance sheet and cash flow. We ended the quarter with cash and cash equivalents of $107 million. Inventory increased $2 million or 1% compared to the same period last year, comprised of a 4% reduction in domestic inventory and partially offset by 61% growth in international inventory to support growth initiatives.

Capital expenditures in the third quarter were $16 million. For 2025, we now expect capital expenditures to be approximately $60 million with the majority of the increase coming from incremental investments in pre-roll automation to support the strong demand for our Anthem pre-roll brand.

In the third quarter, we generated operating cash flow from continuing operations of $53 million, bringing the year-to-date total to $104 million, driven by improved margins and continued improvements in working capital management. Free cash flow from continuing operations was $37 million in the quarter. Our outstanding debt was $544 million. During the quarter, we repurchased $3.2 million of our 2026 notes at an 8.75% discount, and we reduced our acquisition-related debt by $13 million. Subsequently to quarter end, we retired an additional $30 million of debt, the majority of which went towards paying the third and final tranche owed to Tryke.

Last month, we closed on a $100 million upsized revolving line of credit with Needham Bank at an interest rate of 7.99%, which then resets to 8.99% upon the refinancing of our bond. This is a significant accomplishment given the challenges the industry has had attaining standard banking access and speaks to the confidence and continued support our partners have in our long-term strategy. We will continue reducing various components of our debt throughout the year while maintaining ample liquidity to support our operations and growth objectives.

Consumer has been resilient this year. However, macro headwinds continue to pressure disposable income. That said, overall demand for cannabis remains robust, yet pricing pressures are not abating. As such, for the fourth quarter, we expect total revenue to be up low single digits sequentially from the third quarter.

With that, I'll turn the call back over to the operator to open the line for questions.

[Operator Instructions] The first question comes from Aaron Grey with Alliance Global Partners.

Great to see the continued momentum, especially on the international side here. I want to kind of start with my question on that. How do you guys view the potential for this momentum you've had on the international front to continue in 2026? What do you see as a potential risk to disrupt some of the growth that you've been seeing? Would you see it more so in terms of the increased competition, which force you called out in your prepared remarks? Or maybe regulatory changes such as risk to German telemedicine or otherwise. Any type of color in terms of your outlook for continued growth for international would be helpful.

Aaron, thanks for the question. Well, all of the above, basically, there's always risk and regulatory in new industries like cannabis and especially early-stage industries like cannabis in Europe, where it's behind sort of U.S. and Canadian development by about 5 years. There can be regulatory changes. There's been rumblings in Germany, Australia and other markets. We know we had changes in Poland, which affected the market.

However, at the moment, demand is very robust. It continues to grow. Supply chains are getting better. The government is clamping down on some of the illicit product that was hitting the markets. I think that all-in-all, we're pretty bullish on next year and the growth, but we have to look at it quarter-to-quarter because these things do change. We know -- as I said, we know there are changes coming in Germany and in other markets, but there's also new markets coming online. I think it's a mixed bag, but it's one that we're continuing to be quite positive on and continue to invest in.

The next question is from Frederico Gomes with ATB Capital Markets.

Just regarding the improvement in potency and yields that you're seeing. Obviously, you mentioned all the price compression that we're seeing in those markets. Do you see any path here for substantial margin expansion in 2026 with that improved quality and improved product mix?

Listen, as you see, we've had substantial margin improvement this year, as we said to the market earlier in the year that we would end the year -- exit the year at a healthy 50% gross margin. It looks as though that's where we're going to end the year.

Going forward, it's a very volatile market. I wouldn't want to make the prediction of where we're going to be next year, but I can say one thing. The company's metrics internally will continue to improve. We're going to continue to put pressure on costs. We're going to continue to be more efficient in the way we manufacture. We're putting a lot of automation equipment in order to bring down costs as well and become more efficient, but where we end up with price compression is nobody can predict at this point in time.

There's a lot of things in the U.S., just like there is in Europe. There's regulations in the federal government right now in hemp. Obviously, if hemp gets shut down, that would have a massive improvement to both demand and margin. I believe in the U.S. If they do something in between, it could have different effects. It's a little bit early for us to say. I think in the first quarter -- in the year-end call, we'll probably take a look at that and make some forecast to that effect. Right now, I can only say what we can control. We can control our internal metrics. We're going to be better next year than we are this year.

The next question is from Russell Stanley with Beacon Securities.

Maybe just following up on Germany. You mentioned the import caps just lifted last week. I think in August, you were thinking that you might see pricing and margins normalize here in Q4, but it seems like the caps took longer to get lifted than perhaps you'd expected. How are you thinking about this now? Is that more of a Q1 event? Or might it take longer?

Listen, I think it's going to be difficult to tell. Again, as we all know, there is changes to German regulation coming. They may be very small. They may be large. We just don't know at this point in time. We're pretty close to the government, and we're pretty much involved in a lot of the changes that are taking place.

What I can say now is that there's nothing that looks that would be catastrophic to the industry. I think that most of the changes the government looking at could even positively impact the business in terms of illicit product getting into the market and some of the dumping of product. That could actually be a positive.

On the other hand, it could also have some negative consequences. It's a little bit too early to tell. We don't see any changes in the fourth quarter. We see robust demand in the fourth quarter. Basically, Curaleaf is in a slightly better position than most because we have been permitted to sell, for instance, vapes into the market because of our medically approved vape, and that is driving demand heavily here in the fourth quarter and will continue into the next quarter as we're the only company today that has a medically improved vape in Europe, which is helping us both in the U.K. and Germany.

Soon, we've just got approved in Australia, and that is driving, and that's giving us a little bit of a head over everyone else and that other companies just don't have that product.

The next question is from Bill Kirk with ROTH Capital Partners.

Gallup had a pull out yesterday that showed, less Republican voter support year-over-year for cannabis legalization. If that's really the case, what do you think that means for state reform in places like Florida? Or what could it mean for federal progress on cannabis initiatives?

I don't know about Gallup's report. I don't believe in most polls anyway because according to those same polls, Trump would not be President, and he is. I'm not a huge believer. In terms of our own polling that we've done together with the administration, I can only say one thing that we pulled NAGA, which is the most conservative part of the U.S. population and cannabis held firmly at 65% on adult use and I think 69% on medical. It's got very strong support from the work that we've done.

The next question is from Kenric Tyghe with Canaccord.

Boris, in your prepared remarks, you called out the more pronounced seasonality in Arizona and Florida comments similar to what we've heard out of some of your competitors. Could you provide any indication on just how much of a drag Florida and Arizona were compared to their typical performance? Or alternatively, even just give us some indication around how those states have performed quarter-to-date, where you've seen some sort of normalization there or where they're performing as they more typically would?

Thank you for that question. Yes, we've seen substantial recovery in October and generally have had a very strong October. Florida for Curaleaf didn't have as much compression as we've had in previous years on cyclicality. Arizona, however, yes, we did. It's been pretty regular now. I think it's about 4 years in a row where, as we all know, Arizona tends to run exceptionally warm in -- with temperatures well over 100 degrees for most of the summer, and that tends to have an exodus of the population. But that -- we've seen a very strong recovery in the last 2 weeks of September going into October and October was very strong. It is cyclicality, is weather-based and it has recovered.

The next question is from Pablo Zuanic with Zuanic & Associates.

Boris, if you allow me, I'm going to ask you a 2-part question and both is related to hemp. Regarding hemp, in my opinion, and I could be wrong, it seems to me that Green Thumb has been able to move a lot faster in hemp because they bought Agrify and they bought the NASDAQ vehicle. They were more compliant on everything around hemp and they were able to distribute Señorita and a bunch of other hemp derivatives through that vehicle. Would that be something that you would consider buying a NASDAQ-listed vehicle that will allow you to move faster in hemp derivatives? Again, my assumption could be wrong.

The second one that maybe is more important, in my interpretation, and again, I could be wrong, by reposting that video from the Commonwealth project into social, the President -- and there's a lot in that video. The President was pretty much also backing hemp-derived CBD, right? That were specifically mentioned in that video. Someone could say that backing hemp-derived CBD and perhaps other derivatives is not compatible with backing the THC cannabis industry. If they are making promises to 2 separate industries, how does that work out in the end? Does that maybe call for both the THC industry and the heavy industry maybe to work together in lobbying the federal government, which is something you've mentioned before. I'm sorry, I know there's a lot there, but hopefully, you can comment on all of that.

Well, let me answer the second question first. I think the President published a video. I can guarantee you he didn't watch it until the end. I'm not sure the President had full knowledge of full content in that video. Our view that CBD alone has virtually no medical properties at all. You have to eat almost 1,000 milligrams of it to have any impact in terms of anti-inflammation or anything, and so usually, it is mixed with other elements or other cannabinoids in order to get its effectiveness.

Without those cannabinoids, CBD is largely useless, unless eaten or taken in very, very high quantities. I can tell you right now, at least the briefing papers that the President administration have received, both from the regulated industry, but also from the medical industry would show that CBD alone is not very effective, and we'll soon be publishing some results of our medical studies that we've done in Europe that we've recently submitted to the MHRA in the U.K. and hope to receive approvals on that will show that.

I don't think he's sending a mixed message on there. I think that was a video generally supporting CBD and other cannabinoids for medical purposes in the United States. The President has made his position clear that he supports cannabis as far as it's concerned for medical reasons, not for recreational purposes. That's, I would say, on that video.

On the other purpose, I don't comment on our competitors. Curaleaf is very comfortable, very happy with the positioning that we have in the hemp-derived products. I can promise you, we're doing just fine there and are not concerned about competition, especially because the industry is so young and so early stage that really whether or not somebody sells $1 million more than the other party at this point in time really makes no difference. We're looking at a multiple tens of billions of dollars of potential revenue out of this industry over the next 5 years, and that's really the prize that everybody is after.

This concludes the question-and-answer session. I would like to turn the conference back over to Camilo Lyon for any closing remarks.

Thanks, everyone, for joining us tonight. We will talk again in 90 days. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.