We believe that our gross margin performance over that trailing 12-month period provides better context than this one particular quarter.

Thank you. I'll pass it along.

Thank you. Our next question comes from the line of Derek Lessard from TD Cohen. Your line is now open.

Good morning, everybody. Really strong results, guys. Congrats, Mike, to you and the team. Good color so far. Two-part question, I guess. Was this, I guess these results, were they better than you guys had expected internally? And then secondly, Is there anything that you can point to that really went really right for you guys in the quarter? And I think Anna answered some of that, but curious on your thoughts.

Thanks, I appreciate it. And I think we're generally optimistic, but we're always conservative. So we're all extremely pleased with the results. I think that you just saw things Thank you for having me. You know, if you think about yield and you think about the weather and growing season, that was certainly positive. But things are just moving in the right direction in most of the markets, and a lot of the work we've put in the last few years, you're starting to see things click. And as we continue to dial in, you know, at GroCo and some of the manufacturing, you know, at Stainer in Israel, things are improving.

Absolutely. Just on Canada, I guess there's been some talk about a pressured consumer here and a move towards some more value-oriented product. It doesn't seem like it's the case or you guys have run into that problem, but maybe just comment on what you're seeing from a Canadian consumer perspective would be helpful.

yeah look from our perspective it's it's really about delivering value and the value propositions which matters and for some that might be you know the value category and then you know for us it's as long as we're providing more value um you know i think that there's still in our in our you know segments there's a lot of opportunity i think that you can also see some switching just based off of cost from other categories so you can see someone that maybe was looking at beer and they think of what's more cost effective and they move to cannabis. But we haven't really seen a lot of issues in terms of the resiliency of the consumer, but I understand it's more broadly out there.

Yeah. Thanks, Mike, and congrats again. Thank you.

Thank you. Our next question comes from the line of Indigo Bayliss from Canaccord Genuity. Go ahead.

Hey, good morning. I'm on the line for Kenrith Tighe at Canaccord. Congratulations on the quarter. My question just relates to sort of your GroCo integration. So it appears that GroCo is moving along quite nicely. I was wondering if you had any commentary on how that increased supply is supporting your market share gains and then sort of your next strategic area of focus is through leveraging this facility. And then the second part of that is, I guess, your expectations on the fully ramped site and then how it might contribute to that top line and gross margin contribution in the future.

Sure, thanks. So, yeah, I think it's coming along really well. It's, you know, it's fully online. I think that, you know, over time you'll see some more efficiency gains just as we continue to dial it in. You know, whether that's the facility or just improvements, you know, the genetic breeding program we've had for years, I think every year you get to see new genetics come out and there's, you know, a lot of improvements we're really excited about. I think that when you think about opportunity, for efficiency. Genetics is actually, it's hard to measure and put out as far as like building a facility versus genetic breeding, but I still think genetics is probably where you'll see the most efficiency gain. But I think GroCo is going extremely well. I think that having that extra supply, the majority of the market globally is still flour. So the gains that we've had are a mix of having more flour I think increased strength in pre-rolls, increased strength in vapes and maintaining the lead we have in edibles. And so, yeah, I think they all sort of contribute. But the facility expansion, it's really adding more grow to what we already had. So it's fully integrated as far as processing. And it was just figuring out scheduling, being able to get the increased product through. And I think it's something that we now have a full handle on.

Thank you. Thank you. Our next question comes from Pablo Zolanek from Zolanek and Associates. Your line is now open.

Thank you, and good morning, everyone. Mike, can you expand on your supply chain in Israel? I don't know if you can talk about what percent of what you sell is is produced by Kronos in Israel. How much is it imported? I'm just trying to understand the flexibility to ramp up domestic production if there are restrictions on imports. And also, when you report your total Israel sales, does that include product that you buy from third parties, whether in Israel or from outside Israel for that market? Thank you.

Sure, thanks. So, yeah, we do have a domestic grow. You know, we do buy from third parties. Israel or otherwise and also from GroCo in Canada. But everything is included when you see sales in Israel. It's everything that goes through our facility and we sell under our brand. So we have all the packaging and manufacturing is done there in addition to the grow. But I would just go back and say we really think that there's not merit to the anti-dumping investigation. We've gone through it once already and I think You can look at the results and it's clear this is not a market where we're like, oh, we need to get rid of excess product. It's something we view as a strong and important part of our business. We've increased supply with Israel in mind, and it's something we'll continue to do, and we're confident that we will prevail again.

Thank you. Look, and just regarding the U.S., in a recent podcast, I think you made a comment that you have a roadmap under various scenarios, right? A bit of a matrix. If this happens, you do this. If this happens, you do something else. But in a scenario where we continue to, where we have rescheduling, but we continue to have this state silo system with no exports, no federal oversight by the FDA, and everything regulated by the state, Is that a scenario in which Kronos would want to participate and get more active in the U.S. or not really if things don't change from that perspective?

Yeah, so if you're assuming it's sort of like, I think you're asking you freeze sort of the system we have today where, you know, there's state medical markets that in theory could be accessed but adult use does not roll over and we assume that there's no interstate commerce. I think if you were to put aside the question of whether or not under Schedule 3 there's potential challenges about interstate commerce, I think we would look at entering with more of a focus on borderless products than on sort of a full production site. I think because as much as we could assume that it gets locked like this forever, I still find it hard to believe that you're not going to eventually have interstate commerce and you won't have free trade just given every other industry and The Dormant Commerce Clause being pretty strong. So we would look to enter in with a number of products. And I think that when you hear us talk about borderless products, that's the flexibility it affords us. So I still think that there are ways to enter in with genetics, with our edibles, with our vapes, with pre-rolls, but not necessarily building out really strong grow infrastructure. so more of an IP focus than full production. And I think the reason for that is I do believe eventually that it's gonna be really tough to start building out infrastructure state by state when you're eventually gonna have to compete with something that's centralized, absorbs much more fixed costs, and is producing at a national scale similar to what you see any CPC company do.

Right, thank you. I wanna add one more. You know, it has to do more, you know, the liquidity of your stock, and in general, the liquidity of the NASDAQ-listed Canadian LPs, right? That has declined quite a bit over time. You know, we have these US MSOs that supposedly we'll up-list, and NYSE or NASDAQ, and supposedly that's like a big catalyst, right? But I could make the argument that here we have these very sizable Canadian licensed producers like yourselves, which are already NASDAQ-listed, An investor or stock liquidity is thin, right? So, I mean, from your perspective, why is that? I mean, is it just because there's just too much focus on the U.S. and that's all investors want? And they're missing out on what's happening in the Canadian red market and all these very large export potential that the Canadian LPs have? What's your perspective there? Again, I mean, I don't want to repeat the question, but it's like, why, if we have these NASDAQ-listed vehicles right now, Where you have all this growth, the liquidity is so low for the stock in general. Thanks.

You know, yeah, it's tough to answer. I'd say for the size of the market, you probably have a lot of companies. And I think that one of the challenges is that investors probably are, you know, sometimes the loudest companies and the most liquid ones are just making a lot of promises and burn people. So it's much more of a show me type industry now. But you know, I don't really think of it as US versus Canada. I think it's, you know, every company is different. It's no longer just, you know, there's two types of companies in LP or MSO. I think that you're increasingly seeing those lines kind of change and it's, you know, it's not necessarily just Canada, right? You're looking at rest of world versus US, somewhere in both. But ultimately, the way I see it is, you know, people always ask us about capital deployment and Right. Thank you.

Thank you. This concludes the question and answer session and our conference call for today. Thank you for your participation in today's conference. This does conclude our program. You may now disconnect.