Bill Kirk

Bill Kirk inquired about the allocation strategy for products from the new GrowCo capacity, how decisions were made in Q4, and potential future changes due to permit timing.

Answer

Chairman, President, and CEO Mike Gorenstein explained the balance between demand and margin during shortages, anticipating more consistent supply for Canada and Europe post-expansion, with Q4 reflecting initial new product rollout. CFO Anna Shlimak attributed Q4's lower gross margins to expansion-related production quality mix at GrowCo and one-time ramp-up expenses, which are not expected to recur, stating the 43% full-year 2025 margin is a reasonable go-forward level.

Bill Kirk of ROTH Capital Partners inquired about the allocation strategy for products from the expanded GrowCo capacity, specifically how decisions are made, the allocation in Q4, and potential future changes due to permits or other factors.

Answer

Chairman, President, and CEO Mike Gorenstein explained that previous allocation balanced demand and margin during shortages. With increased supply, Cronos expects to fill more Canadian demand and scale more aggressively in Europe, with product quality returning to historical consistency after Q4's ramp-up. Bill Kirk then asked about the drivers for improving gross margins from Q4 levels to the projected 2025 full-year levels, questioning if it's due to price, mix, or lower costs, and why margins wouldn't exceed 2025 levels with greater sales and scale from GrowCo. CFO Anna Shlimak clarified that Q4's lower gross margin was due to expansion-related production quality mix at GrowCo and one-time COGS expenses during the ramp-up, which are not expected to recur. She stated that the full-year 2025 margin of 43% is a reasonable go-forward level for the standalone business, acknowledging potential for future expansion but also possible compression in Europe.

Bill Kirk sought clarity on Aurora Cannabis's global medical cannabis revenue guidance of CAD 269 million-CAD 281 million for the full year, noting that year-to-date figures implied a significant Q4 deceleration. He also questioned why a deceleration in Q4 global medical cannabis revenue was expected and asked for an explanation of why the wholesale gross margin was higher than the Canadian consumer cannabis segment's gross margin.

Answer

Simona King, CFO, confirmed the full-year global medical cannabis guidance and stated that a strong Q4 is expected, acknowledging potential headwinds but maintaining the full-year range. She reiterated the focus on the full-year guidance. Miguel Martin, Executive Chairman and CEO, explained that Canadian consumer cannabis margins are tight due to market conditions, while wholesale margins are better, partly because the wholesale products are less readily available due to stringent regulatory requirements.

Bill Kirk sought clarification on the full-year global medical cannabis revenue guidance of CAD 269 million-CAD 281 million, noting that the year-to-date figure of CAD 211 million implies a significant quarter-over-quarter deceleration in Q4. He asked for the reason behind this expected deceleration. Mr. Kirk also questioned why the Adjusted Gross Margin in the wholesale business (35%) was consistently higher than that of the Canadian consumer cannabis segment.

Answer

Simona King, CFO, confirmed the full-year guidance for global medical cannabis and stated that the company expects a strong Q4, despite the implied deceleration, focusing on the full-year range. She mentioned potential headwinds in some markets but reiterated confidence in achieving the record full-year results. Miguel Martin, Executive Chairman and CEO, explained that the Canadian consumer business has tighter margins due to market dynamics, while wholesale benefits from selling products not readily available globally due to stringent regulatory requirements, contributing to better margins.

Bill Kirk from Roth Capital Partners, LLC asked for clarification on the Vivo liabilities moving to current on the balance sheet and sought directional guidance for Q2 adjusted EBITDA.

Answer

CFO Simona King clarified that the liability shift was a required accounting treatment due to a covenant issue at Vivo, which is being resolved and does not impact Aurora's audit. CEO Miguel Martin added that they expect a quick resolution. For Q2 guidance, King stated that the company expects adjusted EBITDA to remain positive and to grow compared to the current quarter's result.

Bill Kirk asked about High Tide's budtender education and training programs, and how the company leverages its budtenders as assets, especially given licensed producers' interest in engaging them. He also followed up on Remaxion's performance, asking for an update on January's trends after December's improvements.

Answer

CEO Raj Grover detailed High Tide's robust budtender training, including pre-employment exposure to multiple stores, an online learning portal, and a focus on providing a 'Cabana-level' customer experience. He noted that product assortment is centralized to prevent LP influence. Regarding Remaxion, Mr. Grover stated January's performance was slightly lower than December but significantly better than September-November, acknowledging the ongoing sale of remaining low-margin biomass from Portugal while expressing strong confidence in future gross margin improvements with new, lower-cost biomass.

Bill Kirk from ROTH Capital Partners asked about High Tide's budtender education and training programs and how the company leverages its budtenders, particularly given licensed producers' interest in engaging with them. He also requested an update on Remaxion's performance in January, following reported improvements in December.

Answer

CEO Raj Grover detailed High Tide's robust budtender training, including extensive in-store and online learning, to ensure a high-quality customer experience. He emphasized centralized product assortment to prevent external influence. Regarding Remaxion, Mr. Grover stated that January performance was slightly below December but significantly improved from prior months, confirming a positive trend. He reiterated expectations for higher gross margins from new biomass procurement and plans for UK market entry.

Bill Kirk from ROTH Capital Partners inquired about the drivers behind High Tide's accelerating same-store sales growth, specifically distinguishing between industry improvements and the company's market share gains. He also asked if competitor closures were a significant factor in their market share expansion or if it was primarily due to superior execution. Additionally, Kirk asked about High Tide's response to Canadian licensed producers inquiring about future U.S. market access.

Answer

Raj Grover, President and CEO of High Tide, attributed the strong same-store sales growth to High Tide's superior retail model, noting a 137% increase over four years compared to a 2% decline for average operators. He stated that competitor closures play a minor role, as these are typically underperforming stores, with the primary driver being Cabana's thriving model and momentum. Regarding U.S. market access, Grover explained that LPs trust High Tide's execution in Canada and Europe, anticipating similar partnerships for U.S. expansion when federal legalization occurs, potentially through licensing plays.

Bill Kirk asked about the drivers behind High Tide's accelerating same-store sales growth, specifically whether it's due to overall industry improvement or High Tide's market share gains, and if competitor closures are a significant factor. He also inquired about Canadian licensed producers' interest in partnering with High Tide for eventual access to the U.S. market.

Answer

Raj Grover (President, CEO, High Tide) attributed the same-store sales acceleration primarily to High Tide's superior retail model and consistent outperformance, noting that competitor closures play only a small role. Regarding the U.S. market, he stated that Canadian LPs are enthusiastic about global partnerships with High Tide, anticipating similar collaborations for U.S. market entry when federal legalization occurs, potentially through licensing plays.

Bill Kirk asked for more insight into CEO Rahul Goyal's vision for the business, specifically whether portfolio gaps are regional, category-related, or brand-specific, and if the company's focus should become more narrow or broaden into new regions and categories.

Answer

CEO Rahul Goyal outlined a vision focused on portfolio (fixing/filling gaps in flavor, beyond beer, non-alc), execution (local business, deploying resources closer to customers), capabilities (supply chain, commercial, technology), and disciplined capital deployment. He stated the company loves its current markets and aims to win within them, rather than broadening into new regions.

Bill Kirk asked CEO Rahul Goyal for more details on his vision for Molson Coors, specifically whether portfolio gaps are primarily regional, category-related, or brand-specific. He also questioned if the company's strategic focus would become more narrow or broaden to include new regions and categories.

Answer

CEO Rahul Goyal outlined a vision focused on fixing and filling portfolio gaps (e.g., flavor, Beyond Beer non-alc), enhancing execution by being closer to customers and deploying resources locally, and building capabilities in supply chain, commercial, and technology. He emphasized winning in existing markets where the company has a strong foundation, rather than broadening into new regions.

Bill Kirk from ROTH Capital Partners, LLC questioned why the company's stock price doesn't reflect its improved market share and EPS since 2019, asking if a strategic change is needed. He also asked why pricing is limited to 1-2% when COGS are rising more significantly.

Answer

President and CEO Gavin Hattersley responded that the company views its stock as an attractive investment, evidenced by its aggressive share repurchase program. On pricing, he explained that their strategy is not based solely on input costs but on a sophisticated, market-by-market revenue management program that considers brand health and consumer receptivity.

Bill Kirk questioned why the fourth quarter was projected to be a loss, despite strong year-to-date EPS, noting that Q4 had historically been positive before 2021. He also asked about Boston Beer's current stance on channel access initiatives for spirits and tax equivalency proposals, referencing a change in Vermont and the company's Sun Cruiser brand.

Answer

CFO Diego Reynoso explained that the Q4 projection reflects production ahead of demand earlier in the year and a significant increase in marketing spend during the fourth quarter. Founder, CEO, and Chairman Jim Koch added that the company's product mix has shifted towards summer-oriented beverages (Truly, Twisted Tea, Sun Cruiser) and away from historically Q4-oriented brands like Samuel Adams and Angry Orchard. Jim Koch reiterated that Boston Beer's position on channel access and tax equivalency remains unchanged, supporting the historical tax and availability structure for alcohol, aligning with the Beer Institute.

Bill Kirk questioned the full-year EPS guidance implying a significant fourth-quarter loss, asking what has changed in earnings seasonality since 2021 to make Q4 consistently negative. He also inquired about Boston Beer's current position on channel access and tax equivalency for spirits-based RTDs, especially with the success of Sun Cruiser.

Answer

CFO Diego Reynoso explained that the Q4 guidance reflects the lowest production volume quarter, increased marketing spend, and a strategic decision to produce ahead of demand earlier in the year. Founder, CEO, and Chairman Jim Koch added that the product mix has shifted from Q4-oriented craft beer/cider to more summer-oriented Truly and Twisted Tea, impacting seasonality. Jim Koch reiterated the company's consistent position supporting the historical tax and availability structure for beer, aligning with the Beer Institute against spirits tax equivalency.

Bill Kirk asked if negative earnings were a real possibility for the second half of the year based on the guidance, and also inquired about the company's plans for D9 THC products and observations on competitive trade practices in that space.

Answer

CFO Diego Reynoso confirmed that negative earnings are a possibility, particularly in the seasonally slow fourth quarter, depending on summer depletion trends. Founder & Chairman C. James Koch addressed D9 THC, stating that despite experience in Canada, the extreme political and regulatory volatility in the U.S. makes it too risky to enter at this time. He added he has not seen D9 competitors engaging in large-scale slotting fee practices.

Bill Kirk inquired about the impact of the recent deceleration on Constellation Brands' price pack architecture plans. He also asked if earlier implementation of these plans might have led to better depletions performance.

Answer

CEO Bill Newlands acknowledged that earlier implementation of price pack architecture would have been beneficial if the socioeconomic issues were foreseen. He emphasized that price pack architecture is a crucial long-term strategy to ensure products are available at various price points, catering to consumers with constrained spending, and the company is aggressively pursuing this across its brands.

Bill Kirk asked how the recent deceleration has impacted the company's plans for different pack sizes and price points within its price pack architecture, and whether depletions performance would have been better if these plans had been further along.

Answer

CEO Bill Newlands stated that price pack architecture is a long-term strategic play, ensuring product availability across various price points for all consumers, especially when financially constrained. He confirmed aggressive work on smaller sizes and different price points is ongoing, recognizing its importance for both current market conditions and long-term growth.

Bill Kirk requested a reconciliation between UNFI's reported EPS and adjusted EPS guidance for fiscal 2026, specifically asking for the buckets and sizing of one-time items expected to drive the difference in 2026.

Answer

President and CFO Matteo Tarditi explained that the adjusted EPS growth from $0.70 in 2025 to the midpoint of $1.90 in 2026 is driven by the non-repeat of cyber losses, EBITDA expansion from contract exits, shrink/supplier benefits, and productivity. For the difference between reported and adjusted EPS in 2026, he mentioned severance costs related to optimization and restructuring, and a placeholder for transformation initiatives as the big components.

Bill Kirk asked for a reconciliation between reported EPS and adjusted EPS guidance for fiscal 2026, seeking details and sizing of the one-time items expected to weigh on reported EPS but not adjusted EPS.

Answer

President and CFO Matteo Tarditi explained that the adjusted EPS benefits from the non-recurring $50 million cyber-related losses, EBITDA expansion from exiting an unprofitable contract, shrink and supplier benefits, and productivity actions. For the difference between reported and adjusted EPS in 2026, he cited severance costs for restructuring and transformation initiatives as key components.

Bill Kirk of Roth Capital Partners, LLC asked for clarification on whether UNFI's non-GAAP guidance was being reiterated or simply not updated, and questioned the strategic rationale behind ending the distribution agreement with Key Food.

Answer

CEO Sandy Douglas provided context on the ongoing IT security incident, after which President & CFO Giorgio Matteo Tarditi confirmed that guidance was left unchanged due to the incident's uncertainty, despite performance that would have otherwise warranted a raise. Douglas explained the Key Food exit was a mutual decision to leave an unprofitable relationship, driven by post-COVID operational factors. Tarditi added that the net cash impact would be offset by working capital release and expense reduction, with a payback period under one year.

Inquired about the impact of lower consumer foot traffic on the Asian specialty food segment and HF Foods' market share, and also asked about the prioritization and funding of the company's strategic growth projects, including M&A.

Answer

The CEO explained that lower foot traffic is specific to certain markets and restaurant types (buffets) due to immigration policy changes, rather than a broader industry trend. Regarding growth, the company is pursuing a dual strategy of organic expansion through facility investments (funded by cash flow) to unlock cross-selling opportunities, and tuck-in M&A, with larger deals potentially requiring different capital structures.

Bill Kirk of Roth Capital Partners, LLC inquired about the performance of the Asian Specialty food service subsegment amid lower consumer foot traffic and asked about HF Foods' current market share. He also questioned the prioritization of strategic growth projects, including M&A, and how these initiatives would be funded.

Answer

CEO Felix Lin explained that the lower foot traffic was market-specific, primarily affecting buffet restaurants in regions with a heavy agricultural presence due to shifts in immigration policy, rather than broader industry trends. Regarding growth, Lin outlined a dual strategy: organic growth through capacity expansion in Charlotte and Atlanta to unlock a potential $200-$300 million in cross-selling, and tuck-in M&A targeting first-generation operators. He stated that most projects can be funded by cash flow, but larger M&A might require exploring different capital structures.

Bill Kirk of Roth Capital Partners, LLC asked what specific momentum Canopy Growth is seeing that suggests prospects for U.S. cannabis rescheduling are improving.

Answer

CEO Luc Mongeau declined to comment directly on rescheduling prospects but stated that the company sees momentum in select U.S. geographies where demand is increasing and infrastructure is being built for profitable operations, even ahead of federal changes. He expressed confidence in the work being done by Canopy USA to position itself for future opportunities.

Bill Kirk questioned the opportunity cost of the $270 million IQHQ investment, suggesting that at the stock's current dividend yield, share buybacks could offer a better return than the 14% yield from the IQHQ deal. He also asked about the flexibility regarding the timing and size of the preferred stock funding.

Answer

Executive Chairman Alan Gold responded that the company does not base its strategy on daily stock market volatility and that the investment is highly accretive relative to their overall cost of capital and cash on hand. CFO David Smith added that the deal provides flexibility in funding through Q2 2027 and is expected to improve IIP's overall access to capital markets by diversifying into the established life science sector.

Bill Kirk from Roth Capital Partners, LLC questioned the opportunity cost of the IQHQ investment, suggesting share buybacks could yield a better return than the deal's 14% yield, given the stock's current dividend yield. He also asked about the flexibility in timing and commitment for the preferred stock portion of the investment.

Answer

Executive Chairman Alan Gold responded that the stock's high yield was a recent fluctuation and the decision was based on the overall cost of capital, making the 14% return on previously low-earning cash highly accretive. He affirmed there is significant flexibility in funding the investment over time. CFO David Smith added that diversifying into the established life science sector is expected to improve IIP's overall access to capital markets.

Bill Kirk from Roth Capital Partners, LLC questioned the opportunity cost of the 14% yielding IQHQ investment versus buying back IIPR stock, which had a dividend yield above 16%, and asked about the funding flexibility.

Answer

Executive Chairman Alan Gold responded that decisions are based on overall cost of capital, not daily stock volatility, and that deploying cash earning 3-4% into a 14% yielding investment is highly accretive. CFO David Smith added that the funding occurs over time until Q2 2027 and that diversifying into the life science sector should improve IIPR's overall access to capital markets.

Bill Kirk from Roth Capital Partners, LLC asked if the company was considering allowing more scale at the Independent Operator (IO) level, such as multi-store ownership, and inquired about the quantified impact of the Easter holiday shift.

Answer

President and CEO Jason Potter confirmed that the company has continued its practice of allowing its most competent and successful IOs to take on additional stores, noting some were added this quarter. Regarding the Easter shift, Potter referred back to the previous quarter's discussion, stating that the impact was recognized and that the Q2 reported comp of 1.1% was in line with the guidance provided.

Nik, on behalf of Bill Kirk from Roth Capital Partners, asked about the potential for proposed German legislation to inhibit telemedicine and whether Tilray is becoming more bullish on the U.S. cannabis reform opportunity.

Answer

Chief Strategy Officer Denise Faltischek addressed the German issue, clarifying it is only a proposal and that Tilray is actively working with industry groups to prevent changes that could push patients to the illicit market. CEO & Chairman Irwin Simon added that he expects significant pushback. On U.S. reform, Simon expressed cautious optimism, calling the new DEA appointment a 'good step' but reiterating that the company is diversified to succeed regardless of the outcome.

Bill Kirk of Roth MKM sought confirmation of the fiscal 2025 revenue guidance of $950 million to $1 billion and asked if the recent Molson Coors brand acquisition was the M&A contemplated in that guidance. He also questioned what factors were offsetting positive developments in the international business, given its relatively flat quarterly revenue.

Answer

CEO Irwin Simon confirmed the fiscal 2025 revenue guidance remains $950 million to $1 billion and clarified that it does not yet include the impact of the Molson Coors acquisition. Chief Strategy Officer Denise Faltischek and Simon explained that international revenue was impacted by the strategic discontinuation of sizable but unprofitable sales to Israel, which has been offset by entry into new, more profitable markets like Poland and the U.K.