Grown Rogue International Inc. - Third Quarter 2026 Results - DEFI TECHNOLOGIES INC

Explicit Guidance:

• FY2027 Financial Outlook: Projecting 50% revenue growth and approximately 100% adjusted EBITDA growth for FY2027.
• Note on Guidance: The 2027 growth guidance excludes any contribution from the New York operations at this time.
• New York Financial Milestones: Expectations to achieve after-tax operating cash flow positivity within nine months of execution; target of approximately $600,000 monthly after-tax cash flow from operations within 18 months.
• Cost Savings: Anticipated realization of $20 million in annual cost savings over the first six months of the New York integration.
• Capital Efficiency: New York investment expected to meet or exceed a hurdle rate of Return on Incremental Invested Capital (ROIIC) >75%.

Business-Segment Outlook:

• Minnesota: First harvest scheduled for late November 2026 with current 8,000 sq ft flowering canopy producing ~500 lbs/month of whole flower; sales targeting January 2027. Full capacity of 30,000 sq ft planned in phases (next phase ~16,000 sq ft) pending market demand and sell-through.
• Illinois: Currently several harvests in with strong initial quality response; viewed as a "slower build" due to less supply-constrained environment compared to Minnesota.
• New Jersey: Package sales at 100% of production with demand exceeding supply. Construction of three additional flower rooms (+6,000 sq ft) to add ~400 lbs/month capacity; rooms to be populated starting December 2026 to align with spring 420 demand uptick.
• New York: 15 indoor flower rooms fully populated at the Hamptonburg facility with first harvest expected mid-December 2026. Sales expected to begin mid-late January to early February 2027. Current production capacity at ~2,000 lbs/month of high-quality indoor flower, with potential to grow further. Market positioning aims to become the "largest market in our portfolio."
• Brand Rankings: In New Jersey, ranked #3 brand (3.5g category) and #5 brand (including 7g category) by Pistol data; goal to improve rankings in 2027.
• Operational Scope: Transitioning to a six-state footprint (Oregon, Michigan, Minnesota, Illinois, New Jersey, New York) with full vertical control over production.

Market and Competitive Outlook:

• New York Market Dynamics: Belief that the regulated market is undersupplied in quality indoor flower due to historical regulatory prioritization of outdoor/greenhouse growers over indoor; illicit market currently dominant.
• Competitive Positioning: Expect New York to resemble New Jersey's brand-success model ("New Jersey on steroids") with strong potential for independent flower brands in a non-consolidated market of 700+ dispensaries.
• Market Structure: Anticipate serving a large number of smaller doors in New York similar to Oregon and Michigan, avoiding the supply chain control issues seen in consolidated markets.
• Supply Constraints: Minnesota identified as significantly supply-constrained, particularly for craft quality indoor flower.

Macro / Industry Outlook:

• Consumer Trends: Expectation of demand pickup following winter months, specifically targeting "spring 420" for New Jersey operations.
• Regulatory Timing: Regulatory approval for New York purchase agreements expected in Q1 2027; purchase agreement execution targeted for end of current month (December 2026).
• Seasonality: Inventory and production cycles managed to align with seasonal demand spikes.

Strategic Initiatives:

• New York Acquisition: Formation of "Grown Rogue New York" (51% owned) with a capital partner ($10M preferred equity + $5M term loan). Secured a $9M loan for transition funding; total estimated project costs ~$12M. Becoming direct tenant of Innovative Industrial Properties at Hamptonburg.
• Operational Integration: Replacing Pharmacan's point-of-sale system; transitioning retail operations from discounting PharmaCan inventory to restocking third-party products to serve customers first.
• Capacity Expansion: Active construction of new flower rooms in Minnesota and New Jersey; internal design work initiated for Minnesota Phase 2.
• Talent & Infrastructure: Strategic hires including Michael Johnson (lead for NY), Naya Gunnett (Corporate Controller), and promotion of internal staff (Eamon McGettrick to National Director of Cultivation, Jordan Storms for post-harvest standards). Building out back-office support, HR, and accounting teams to manage the "heavy lift" of consolidation.
• M&A Strategy: Focus on disciplined, active business development to support existing markets rather than new geographic expansions (e.g., Massachusetts deal loss vs. New York acquisition).

Risks and Headwinds to Outlook:

• Execution Strain: Acknowledgment that the team is "stretched a bit thin" due to simultaneous execution of growth plans in six states.
• Integration Complexity: Challenges in consolidating retail and manufacturing operations, managing new inventory/procurement workload, and integrating disparate legacy systems (specifically PharmaCan's thin back office).
• Asset Impairment: One-time accounting write-off taken for Rogue EBC in Illinois due to unclear path forward and pivot to the Dwight facility; license and assets remain on balance sheet pending monetization.
• Regulatory Uncertainty: New York acquisition dependent on final regulatory approval expected in Q1 2027.
• Market Execution Risk: Need to successfully translate production efficiency from Oregon/Michigan to new markets and ensure brand resonance/customer engagement.

Management Tone on the Future:

• Confidence Level: High confidence and excitement regarding the "material improvement" in financial performance for 2027 and the strategic value of the six-state portfolio.
• Sentiment: Describes the New York opportunity as "too special to pass up" and views the organization as "well on [their] way" to becoming the leading independent flower company.
• Commitment: Emphasizes unwavering commitment to quality standards despite operational stretch.
• Caveat: Notes that while the foundation is set, the "real test" is brand engagement and customer perception in new markets.

Miscellaneous:

• Operational Disruption: Brief mention of a global Microsoft Outlook outage affecting internal communications and filing timing.
• Non-GAAP Measures: Reiteration that EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP measures; reconciliations available in earnings release.
• Financials: All amounts discussed in U.S. Dollars.
• Historical Context: 10th anniversary of company founding; 2026 characterized as a year of significant growth.