Aurora Cannabis Inc.

Greetings and welcome to Aurora Cannabis second quarter 2022 results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during this conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to our host, Ananth Krishnan, Vice President, Strategic Finance. Thank you. You may begin.

Thank you, Diego, and we appreciate you all joining us this afternoon. With me today are CEO Miguel Martin and CFO Glenn Ibbitt. After the market closed, Aurora issued a news release announcing our financial results for the second quarter of our fiscal 2022. The release and accompanying financial statements and MD&A are available on our IR website and via CDAR and EDGAR. In addition, you can find the supplemental information deck on our IR website. Listeners are reminded that certain matters discussed on today's conference call could constitute forward-looking statements that are subject to risks and uncertainties related to our future or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect actual results are detailed in our annual information form and other periodic filings and registration statements. These documents may be accessed via CDAR and EDGAR. Following prepared remarks by Miguel and Glenn, we will conduct a question and answer session. For retail investors, we have compiled questions submitted to us prior to the call. For street analysts, we will ask you to limit yourselves to one question and then get back in the queue. With that, I will turn over the call to Miguel. Please go ahead, Miguel.

Thank you, Anant. We're very pleased with our transformation plan and we're tracking with just the profitability in the first half of fiscal 2023. And that's less than a year away. Here's why. First, we remain the number one Canadian LP in global medical cannabis, with strong sequential sales growth and margins exceeding 60%, roughly twice that of our competition. We continue to see growth in a number of countries, including the UK, Israel, Australia, and Poland. And our experience and process-driven approach gives Aurora a leg up to profit from the significant opportunities. Second, and this is great news, we continue to rationalize our expenses to the current environment and manage the company with far greater efficiency. Through Q2, we achieved the annualized run rate savings of $60 million. That is nearly double the 33 million we referenced back in November. And I'm pleased to report that we now believe that we will achieve the higher end of our targeted $60 to $80 million savings annually by the first half of fiscal 23. Importantly, none of these cost savings will impact planned growth investments. Third, our balance sheet remains one of the strongest in the industry, and we continue to be smart in allocating capital. Moreover, our capital structure supports both organic growth and provides us with the resources to evaluate strategic M&A. Fourth, we recently launched our science and innovation business known as OCO, which we intend to use to deliver a continuous stream of innovation to the markets. This business already has one of the largest catalogs of high-quality and high-potency genetics and IP and biosynthesis available for licensing. We have already commercialized several new cultivars with other LPs, as well as launched three under our own Sanraf brand. We currently have more than 30 high-quality cultivars not available anywhere else in the market that are ready for immediate trial and exclusive licensing. Bottom line, this is a capital-light, long-term revenue growth opportunity that we're really excited about. Let's now discuss our medical business, which is number one by revenue internationally and in Canada. I'm proud of the team for continuing to find ways to profitably grow the medical cannabis market globally. What sets us apart from the competition in international medical is our regulatory expertise, supported by our compliance protocols, testing, and science that are recognized and highly regarded worldwide. These attributes put us in the pole position for success when these markets open recreationally. During Q2, we demonstrated exceptional growth of 24% in international medical revenue compared to Q1, with success stories in the EU, Israel, and Australia. In Poland, we delivered a total of 290 kilograms in the quarter, which included the largest shipment of any LP into the country to date, according to the Chief Pharmaceutical Inspectorate. We expect for this success to continue as we look to launch new cultivars there in Q3, accompanied by a marketing push. In Australia, our revenues have doubled year over year. Through our exclusive supply agreement with MedRelief Australia, we offer medical patients an EU GMP certified range of products, including dry flour, oils, soft gels, and plan to shortly expand our offering to include vapes and gummies. 2021 was an excellent year for the Australian market, driven by more mainstream acceptance from patients and doctors and ongoing growth in authorized prescribers. We anticipate continued growth in 2022 as Australia's strength in import requirements, which Aurora already qualifies for, and continues to ease patient access regulations. In the U.K., we continue to surpass expectations with our revenues increasing more than five-fold compared to Q2 last year, with the growth driven by a rapid increase in patient numbers. We have already built a leading position in the flower segment and continue to see growth in patient numbers with no erosion in pricing. While the UK, Australia, and Poland are still in their earliest stages of development, we would expect all of these countries to bear more significant profit drivers for us in the future. In Germany, we have the number one and number two best-selling products in dry flour for all of the last calendar year, and a growing share of its oil market following the recent launch of our balanced extract. While we did experience some softness in Q2 due to some competitive pressures, and slower than expected market size growth, Germany remains the largest market in the EU with 83 million citizens, and we are extremely bullish on our future there, given the new coalition's plans to legalize adult rec cannabis and improve medical patient accessibility. While the timelines and regulatory framework are yet to be announced, our leadership position in medical puts us in a very strong position when that milestone occurs. In France, we are preparing our third shipment for the pilot program, where we are the exclusive supplier of dry flour, having secured all three of the available dry flour tenders in the French medical cannabis pilot program. In the Netherlands, we invested in Growery, one of 10 license holders involved in selling only legally produced cannabis in approximately 80 out of 6,600 coffee shops in the country. We expect to recognize revenue beginning in calendar 2023, and over time, this is predicted to be a $2.8 billion market. We continued our success in Israel by shipping over $10 million of cannabis to our partners there in Q2. As of today, we do not expect to recognize revenue from Israel in Q3, but we remain committed to the Israeli market and our partners there as they grow their business in the coming quarters. In these developing markets, predictability of revenue can be affected by regulatory complexities, such as timing of government approvals and import permits. However, our reach into multiple jurisdictions hedges us against this. I want to be clear here. We believe the growth story of the next several years in cannabis will be that of international medical and recreational, and we expect a domino-like effect as acceptance grows. Where there is money to be made in a federally regulated structure, Aurora will be there, and we will win because of our agility and unique set of capabilities, which I mentioned earlier. Some estimates put the cannabis market in the EU alone at $5 billion by 2025, and we expect to grab a sizable piece of this. This will ultimately help drive us to sustain profitability and generate shareholder values as markets develop. Turning now to the Canadian medical market, which we see as a competitive advantage for Aurora and is our most profitable business segment. Our overall revenue was flat in Q2 compared to Q1, although our market share expanded to 23.4%. up from 19.8% in the same period last year. Most importantly, our insured patients made up 72.7% of our domestic medical sales, up from 70.6% in Q1. We are excited to see some opportunities for growth in attracting union groups, employer insurance programs, as well as opportunities to pick up market share with our best-in-class patient experience. We have also launched a number of products and innovations that we believe will appeal to patients. Regarding Canadian adult REC, our Q2 revenue decline reflects the ongoing macro challenges. There's a lot of excess inventory and increased pressure on older SKUs, which together has resulted in price compression. This irrational market is unsustainable in our view, and we're not going to chase unprofitable market share at any cost. Our focus is on how to maximize profitability by leveraging our low-cost production facilities and selectively entering categories that have higher margins. We have the scale and resources to outlast the current environment, and once the market consolidates, we will be in a strong position. In Q3, our innovation pipeline consists of 25 new SKUs, which benefit both rec and medical channels. Highlights include three new cultivars from our breeding program, launched under our Refresh Drift brand, our first offering of infused pre-rolls and hash, and a bevy of new vape, edible, and concentrate flavors, which we expect to hit the market in March. Our full year 2022 innovation calendar includes over 80 new and high-potency SKUs, which would be our most significant and successful innovation push since legalization. I would now like to turn the call over to Glenn so he can provide his financial review.