Kendrick Tai

Kendrick Tai of Canaccord Genuity Capital Markets sought clarification on whether the projected gross margin levels, similar to full-year 2025, factor in the expected close of the CanAdelaar acquisition, or if there's potential for further upside from that transaction. Kendrick Tai also inquired about the Q4 revenue beat, asking how much of it was attributable to timing shifts in international markets versus pure organic growth in the quarter, particularly for international markets and Israel. Finally, Kendrick Tai asked about CapEx initiatives for the current year, seeking confirmation if it's reasonable to expect CapEx to be less than $10 million for 2026.

Answer

CFO Anna Shlimak clarified that her gross margin comments were for Cronos's standalone business, not including CanAdelaar. She noted that CanAdelaar is a profitable business with good gross margins, suggesting it could contribute to margin expansion. Anna Shlimak confirmed that some timing shifts from Q3 to Q4 occurred for international markets outside of Israel, but emphasized that the business is fundamentally growing. Anna Shlimak affirmed that expecting CapEx levels below $10 million for the year is appropriate.

Kendrick Tai sought clarification on whether the projected gross margin expectations, similar to full-year 2025, included the potential impact of the CanAdelaar acquisition, and questioned the drivers behind the Q4 revenue beat, specifically asking about timing shifts versus organic Q4 performance for international markets. He also inquired about 2026 CapEx expectations.

Answer

CFO Anna Shlimak clarified that her gross margin comments were for Cronos's standalone business, noting CanAdelaar is profitable and could add margin expansion. She confirmed some timing shifts for international markets outside of Israel from Q3 to Q4 but emphasized underlying business growth. Anna Shlimak affirmed that less than $10 million is an appropriate CapEx level for 2026.