Two. Good morning, ladies and gentlemen. Welcome to Village Farms International third quarter 2025 Financial Results Conference Call. This morning, Village Farms International issued a news release reporting its financial results for the third quarter ended September 2025. That news release, along with the company's financial statements, are available on the company's website at villagefarms.com under the Investors heading. Please note that today's call is being broadcast live over the Internet and will be archived for replay both by telephone and via the Internet beginning approximately one hour following completion of the call. Details of how to access the replays are available in today's news release. Before we begin, let me remind you that forward-looking statements may be made today during or after the formal part of this conference call. Certain materials assumptions were applied in providing these statements, many of which are beyond our control. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forward-looking statements. A summary of these underlying assumptions, risks, and uncertainties is contained in the company's various securities filings with the SEC and Canadian regulators, including its Form 10-K MDNA for the year ended 12/31/2024 and 10-Q for the quarter ended 09/30/2025, which will be available on Edgar and Cedar Plus. These forward-looking statements are made of today's date, and except as required by applicable securities laws, we undertake no obligation to publicly update or revise any such statements. I would now like to turn the call over to Michael DeGiglio, Chief Executive Officer of Village Farms International. Please go ahead, Mr. DeGiglio.

Thank you, Sherry. Good morning, everyone, and thank you for joining us today. With me on the call are Stephen Ruffini, our Chief Financial Officer, and Ann Gillin Lefever, our Chief Operating Officer, Patty Smith, our Corporate Controller, and Sam Gibbons, Senior Vice President of Corporate Affairs. I'll begin with a review of highlights from the third quarter, then Stephen will review the financials in more detail before I provide some last closing comments. As we discussed in this morning's earnings release, our third quarter was another one of many records for Village Farms International. Our last quarter's call, we talked about our confidence in the sustainability of the positive trends we were seeing across the business as we continue executing and scaling a profitable global enterprise. Today's results, only three months later, validate the expectations we discussed, and we remain confident that our competitive strengths combined with the incremental growth catalyst we see on the horizon position us for a very strong future. Consolidated net sales increased 21% year over year in Q3, and net income from continuing operations was $10.8 million or $0.09 a share, an increase of almost 10% sequentially compared to the record we set last quarter. For the second consecutive quarter, we also achieved new records for adjusted EBITDA and adjusted EBITDA margin from continuing operations of $20.7 million and 31% of sales. And we continue to see excellent cash conversion with consolidated cash flow from operations of $24.4 million, another record for Village Farms International. Our Canadian cannabis business delivered 29% year-over-year growth in net sales, reaching a new high of $64.1 million in Q3, driven by strong performance in our targeted channels, improving sales mix, which has led to higher average pricing, and continued momentum in the international medical export division, which we…

Thanks, Mike. As a reminder, as of May 30, some of our produce assets were privatized and are now classified as discontinued operations. Reported financial results for comparative prior periods have been adjusted accordingly. I'll start with a review of our consolidated results. Consolidated net sales increased 21% to $66.7 million driven by growth in our Canadian cannabis segment as well as the second full quarter of contribution from our recreational cannabis sales in The Netherlands. Net income from continuing operations improved to $10.8 million or $0.09 per share, compared to a net loss of $800,000 or $0.01 per share in Q3 of last year. Consolidated adjusted EBITDA from continuing operations was $20.7 million compared with $4.7 million in Q3 of last year, resulting in an adjusted EBITDA margin of 31% in the quarter compared to 8.5% in Q3 of last year. Our cash flow from operations improved to $24.4 million compared with $6.1 million in Q3 of last year. Turning now to our segmented results. We will start with Canadian cannabis, which I will discuss in Canadian dollars for comparative purposes. Total net sales were $64.1 million for a 29% increase versus Q3 last year. The year-on-year improvement was driven by strong performance in our targeted channels, improved pricing, and continued momentum in our international medical exports, which increased 758% from Q3 last year to $16.3 million. Canadian retail branded sales were $37 million, in line with our expectations following the realignment of our product portfolio to higher margin SKUs. Canadian cannabis gross margin was 56%, up from 26% in Q3 last year and well above the high end of our target range of 30% to 40%. As Mike mentioned earlier, our improved gross margin was helped by favorable pricing as compared to the prior year. And we also…

Well, thank you, Stephen. And thanks and congratulations to all the Village Farms International team members around the world whose hard work, tenacity, and integrity are continuing to raise the bar for ourselves and our industry. In addition to delivering record profitability in the Canadian cannabis industry, our performance this quarter also surpasses the profitability of any U.S. operators who have reported thus far in this current earnings season. Village Farms International is now one of the most profitable cannabis businesses on planet Earth, and we remain highly motivated to exceed our own expectations. We are growing our business organically, funding our growth with our own cash generated from operations, and we believe we still have a considerable amount of future organic growth catalysts on our horizon. We are confident in our ability to continue driving growth in revenue and EBITDA supported by our proven operational and manufacturing expertise, our culture of cost discipline, and continuous improvement. And of course, through the continued excellence and leadership of our people. I'm incredibly proud of all the progress our teams have made together this year and know that we are all looking forward to another strong year of growth in 2026. Operator, that concludes our prepared remarks. We'll take questions now.

Thank you. Due to time restraints, we ask that you please limit yourself to one question and one follow-up question. You may then return to the queue. Please standby while we compile the Q&A roster. And our first question will come from the line of Aaron Grey with Alliance Global Partners. Your line is open.

Hi, good morning. Thank you for the questions and congrats on the strong quarter here. First question for me, I want to talk a bit about cannabis gross margin, 56%. You talked about some of the year-over-year improvement, but I want to talk even sequentially. Right? Some very strong improvement. So some of the drivers you saw there, you know, when we think about international mix, you know, it's pretty similar quarter over quarter, but still saw, you know, some pretty meaningful expansion there. So is there some improvements in pricing and mix within international? Some of the more meaningful operating efficiencies? So just some of the specific drivers in terms of some of the sequential trends there. And then how best to think about that gross margin going forward and how sustainable gross margins more close to these levels are? Thank you.

Thanks, Aaron. So overall, we had improved efficiency. One of our DNA KPIs is continuous improvement on cost and efficiency. So that improved efficiency and productivity. We had higher crop yields. We normally do in the summer than the winter. Favorable pricing, as I mentioned, compared to the prior year tied to mostly a function of SKU mix, which I mentioned on the call. Lower packaging inputs and improved margins and of course, international export which has solid margins. Those were key drivers to those results. Ann, you want to add some color? I think you covered it. Okay. Thank you. As far as gross margin, you know, we as we said, our sweet spot is always 30 to 40% because you have to look long term. There's always different ebb and flows in the market. But we are always trying to exceed that, but we're not really changing that guidance between thirty and forty was a strong quarter for us and we certainly take it. And we're going to always strive to exceed. But we're we're gonna stick to those, that sweet spot we mentioned consistently over the last few years.

Okay. Great. Appreciate that. And then on the international front, more thinking about the top line. You know, can you mention in terms of the competitive environment, maybe some of you mentioned that you haven't had as many issues, but have some of the supply challenges from some of your peers you're hearing about or or some of the quality issues, has that provided you you know, more of an opportunity to take meaningful, you know, share gains within the past two quarters? And, you know, how's it seems like you think that's pretty sustainable over the near to medium term, you know, with Delta second half of Delta two coming online and even some emphasis to potential for Delta one coming online, in 2027. So just maybe talking about some of the dynamics you're seeing internationally and what's making you so constructive at least in the near to medium term for some continued opportunities there? Thanks.

Yeah. Well, I think, you know, it's still an asset industry. I mean, when I look at the cannabis business ten or fifteen years from now, it's gonna be interesting to see how it segments from commercial side, innovation side. To cultivation. But at this stage, cultivation rules, I mean, at the end of the day, you have to be able to consistently perform super high quality every single day and we always strive to do that at the lowest possible cost. Our original business model was based on that, and the team is executing. So without having consistent solid, good quality nothing else really matters. That coupled with EU GMP, the team has executed brilliantly. We had a renewal after our first three years with Flying Colors and we're actually expanding that whole EU GMP processing side for the future. And then you know, first and then coupled with it's not so much of as I said in my comments, one, two, three. You have to have all three. It's sort of like a three-legged stool. If one of those legs fall off, you topple over. And the final one is the execution of the team. Both on the commercial international side and on cultivation manufacturing side. And I think that's what we've communicated from day one we got into cannabis, and, it's a matter of how well you can execute.

Okay. Great. Appreciate the call. I'll go ahead and jump back in the queue.

One moment for our next question. That will come from the line of Frederico Gomes with ATB Capital Markets. Your line is open.

Hi, good morning. Congrats on the outstanding quarter here. Thanks for taking the questions. First question on The Netherlands, very strong performance. And I adjusted EBITDA there. So I guess just two questions there. One is, gross margin declined a bit sequentially. So could you talk about what drove that decline if related to mix or investments or something else? And then second question on The Netherlands as well. Know, I know that you have a 30 to 40% gross margin target for Canadian cannabis, but I'm curious about if you have the same sort of target for The Netherlands long term. Thanks.

Hi, Frederico. Yeah. We absolutely have the same goals on the gross margin long term for The Netherlands. You know, it's a start-up. We just started producing in the end of the first, second quarter. So when you really look at some of the competitors and taking years, if not decades, to ramp up their business, I think we've done pretty well within the first year. It hasn't even been a year of cultivation. So you'll definitely see some lumpiness as we get stable going forward. So I think that shouldn't reflect that we're coming off on gross in any given quarter over the long term. Thank you. And then second question on Germany.

You mentioned you gained market share sequentially there in each of the past four quarters. So could you provide maybe a number in terms of where you think your market share is right now and whether you think that market share momentum is gonna continue in terms of gaining share sequentially over the next few quarters?

Well, you know, I'm never gonna first of all, we're not putting out what we think the market share is, but I wouldn't be surprised if we're number one in whatever that market share number is. And the reason I don't want to comment is because there really are no clear statistics as of yet. So I would be just surmising it at this point. But I believe we're by far the number one market share in Germany, and I think for the reasons I mentioned earlier and in my remarks, to answer Aaron's question as well. I think that we took an approach, you know, in let's control what we can control. And that's where we believe we differentiate ourselves. We didn't look at Portugal. We thought Portugal was a risk and a liability both in supply chain, regulatory side. So we just built our business, for Europe based on our own production, our own people direct to our customers. And I think, you know, that seems to be a winning formula at this point in time. And I believe the German market is going to continue to grow as well going forward.

Thank you very much.

One moment for our next question. And that will come from the line of Pablo Zuanic with Zuanic and Associates. Your line is now open.

Thank you, and good morning, everyone. Look. My question is really a three-part question on Texas. I mean, obviously, in my interpretation, the regulatory changes in the medical program there are quite favorable. Especially for the three incumbents. There. Right? There may be 15 more licenses issued, there will be a bit of a lag, a time lag. Those new licenses, not even clear when they will be issued. So I just want to have a sense of how aggressive is Village Farms International willing to be in Texas in terms of M&A activity? And what could that mean for your Nasdaq listing? How would you think about that? Because when we look at, you know, Canopy Growth or SNDL, it seems that other companies have not been willing to give up their Nasdaq listing. But, I mean, what can you say publicly on this topic? Thank you.

Well, good morning, Pablo. I'm gonna first let Stephen answer a couple of the first points on Texas. And then we could kinda come back to some others. So regarding the Republic Of Texas, Stephen, comments?

Yeah. We're certainly anticipating, and excited and understand that the Department of Public Safety is still online to issue its licenses on December 1. So we should hopefully know something. But that would be twelve additional. Not this. Yeah. Twelve additional. So we'll see if they keep on their timeline. We've heard nothing to the contrary of that. Texas has improved its medicinal definition and expanded the illnesses that can access the system. That being said, it's not quite as open as something like Florida, but we are certainly excited about the opportunity.

Yeah. And I think regarding Nasdaq, we feel very that we can find a suitable structure going forward. We've been working on that for a couple of years. So, when and if we'd probably move forward, but we're not gonna jeopardize at any time on that Nasdaq listing problem.

Okay. No. That's good. Thank you. Understood. And then the second question, just regarding Quebec, the province of Quebec, I think you've said in the past, it's about 40% of your revenues. I don't know if it's 40% of your Canadian domestic earnings on the cannabis side. But, you know, there's been some regulatory changes there. Vape is allowed now. I think there were other regulatory changes on caps. Maybe more stores. You know, what's your outlook for Quebec province? And how are you positioned to benefit? If you can correct me if I'm wrong in terms of the relevance of Quebec to your business on the recreational side. Thank you.

Pablo, good morning. It's Ann. Quebec is very important, but your number is on the high side. It's not 40% of total cannabis. We've traditionally been a little bit higher than the spread of revenue across provinces, just to give you some sense of that. There are some changes coming. Vape is one of the big changes. I think the SQDC has done a great job of assessing where they're not able to grab the listed or the legacy market share, and this is going to be a big form factor to move into the private market or to, sorry, the legal market. And we are participating in that as we go forward.

Right. Thank you. Look. I'm gonna ask I'll start one. I know it's only two, but let me break the rule this one time. On the Dutch side, I know that there's 10 licensees on the production side, but it seems that not all of them are up and running. Some of them have had problems. It seems that you are one of the few that's expanding capacity. In this case, was five times. So like you're in a very good position. Right? And there are other people that maybe started first are in a weaker position now. Do you want to comment on the competitive landscape on the production side in Holland right now?

Sure. Well, I think eight are in production. Two more will be coming on in the next quarter or so. I think of the ten, one will probably be more of a light asset model. There are issues with others, quite a few that I've heard of. But that can always be an opportunity for us. But we're very focused on getting, as I said, this next facility will increase our capacity fivefold. So our focus is getting it up and running. Crawl, walk, run. And then we'll see what opportunities lie ahead. We're very excited about those opportunities in the future in The Netherlands for us. As well, Pablo.

Okay. Alright. Thank you. Thank you.

Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. DeGiglio for any closing remarks.

Thank you. Okay. Thank you again for joining us today, and we hope you have a wonderful holiday season. We look forward to our next update for year-end in March. And wishing everybody a happy New Year as well. Thank you, operator.

This concludes today's program. Thank you all for participating. You may now disconnect.