Aurora Cannabis Inc.

Greetings and welcome to the Aurora Cannabis Inc. First Quarter 2024 Results Conference Call. All participants will be in a listen-only mode, and a question-and-answer session will follow the formal presentation. This conference call is being recorded today, Thursday, August 10, 2023. I would now like to turn the conference over to your host, Aneth Krishnan, Vice President, Corporate Development and Strategy. Please go ahead.

Thank you, Michelle. 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 fiscal 2024 first quarter financial results. This news release accompanying financial statements and MD&A are available on our IR website and can also be accessed via CDAR and EDGAR. In addition, you will 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 certain risks and uncertainties related to our future financial 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 similarly be accessed via CDAR and EDGAR. Following prepared remarks by Miguel and Glenn, we will conduct a question and answer session with our covering analysts. We ask you to limit yourself to one question and one follow-up before going back into queue. With that, I will turn over the call to Miguel. Please go ahead.

Thank you, Anand. Aurora today is a differentiated and diversified company with a leading global cannabis platform and a leading North American plant propagator. In cannabis, we are medical first and a leader in that business across the world. In plant propagation, we are one of the top companies operating critical infrastructure in the controlled environment agricultural industry. We are very proud of the record quarter we just delivered. We generated the largest adjusted EBITDA we've ever achieved, and revenue and adjusted gross profit at the highest level Aurora has reported in three years. But be assured, we're not resting here. We're pushing harder than ever to bring our diversified operations to free cash flow generation. Let me step back for a minute and look at a bigger picture with you. Next month marks my third anniversary as CEO of Aurora. During those three years, we've undertaken a very focused and purposeful transformation. One, we reset our operational footprint and cost structure. We are focused on leveraging our industry leading science and cultivation expertise to produce some of the world's most innovative products and high potency cultivars. These next generation cultivars are routinely producing 28% THC and higher potency with 43% greater yields and a 26% cost per gram reduction compared to our legacy cultivars. and we expect to continue to improve in the future. Two, we reduced our SG&A expenses while simultaneously augmenting our CPG and pharma experience in both our leadership and our operating staff. Over the last three years, quarterly SG&A has been taken down by 50%. But we retained critical talent and invested in experienced and agile new recruits. We're very proud of how our high-performing team can collaborate and execute. We rededicated ourselves to the market we've always been leaders in, medical cannabis, both in Canada and globally. We invested in technology, talent, product selection, and patient experience. With over two times the medical market share of our nearest competitor in Canada and leadership positions in Germany, Poland, the UK, and Australia, we succeed where others don't because of the high barriers to entry and our world-class cultivation and manufacturing. We've been leaders in Germany since 2017 and one of only three companies with German production facilities. We continue to invest and support the European medical cannabis with an on-the-ground team in Germany, Poland, the UK, and elsewhere. Four, we recognize the need to diversify our revenue and cash flow based beyond cannabis. While the case for global cannabis is a very bullish one, the timing of regulatory change can sometimes be difficult to pinpoint. We found our first adjacency in the infrastructure-like industry of plant propagation. Over the long term, plant propagation in cannabis, as in every other agricultural industry, will become an important part of the value chain. But in the meantime, our controlling interest in Bevo is expected to provide free cash flow growth and exposure to a critical infrastructure-like asset class that most public market investors cannot get exposure to. The tailwinds for the controlled environment agricultural industry include home-sharing the food supply, supply chain uncertainty, and reducing our food's carbon footprint. All of these are compelling long-term value creation attributes we expect to accrue to Aurora shareholders. In addition to the positive macro tailwinds, we see a path for Bevo to double its revenue and cash flow over the next two to three years through the use of our underutilized cannabis facilities, Aurora Sky. which is well-suited for the orchid business. A market segment ready for supply chain disruption, pre-finished orchids in North America are mainly sourced from overseas, with the attendant cost and quality issues that brings. But the capital required to build a highly controlled environment to grow orchids in North America is a barrier. And for Bevo, many of their orchid customers will be the same blue-chip retailers that they have already served for years. We expect our first sales of orchids before the end of this calendar year, with calendar 2024 representing a step function change in Bevo's revenue and EBITDA generation as the Orchid's business plan hits a steady state. And now Aurora's son. With some growth capital, which will be fully funded from a committed bank facility, this 1.6 million square foot greenhouse in southern Alberta will greatly expand the reach of Bevo to the farmers and greenhouse operators of Alberta and the American Midwest. And finally, our balance sheet. where over three years we have reduced our convertible debt from $531 million to approximately $63 million as of today, demonstrating their prudent fiscal management and focus on cash and cash flow are top priorities for the company. Of course, I'm very proud of our team and our success to date. But as I said earlier, we're just getting started. On the top line, we see a path to growing our business across all markets that we operate in. Investment and innovation is vital to our success, and we plan to introduce approximately 75 new products to the Canadian market in the coming three quarters, with the best performing cultivars and extract products being introduced to our international channels. We have the opportunity to earn profits in Canadian adult use through our upcoming product launches. And with our continued drive to invest in efficient cultivation and manufacturing, we see opportunities for our Canadian adult use business to move to profitability. Our Canadian medical business continues to benefit from our broad and attractive product assortment and the excellent patient experience we deliver. With disruption in the Canadian marketplace, we believe Aurora's number one position in the medical market leaves us well positioned to gather business from other medical LPs in Canada. Our proven next generation cultivars that we're launching across Europe and Australia are proving themselves to be popular with patients. Right now, with the products we have taken to market in the past three months, we have more demand than we've been able to supply in Europe and Australia. In an industry challenged by excess supply, we are excited by this ambivalent position, and with recent changes to our supply chain, we think we can handle this increasing demand. When speaking of Europe, I should note the potentially positive regulatory changes we're seeing there. Germany in particular has a lot going on. We have an excellent team on the ground in Europe, including one of the top regulatory advocates in the industry. We're very supportive of the direction the government is moving in. With the potential for de-scheduling of cannabis from the narcotics list in the near future, the German medical market has the potential to expand in size significantly. And of course, France, where a medical cannabis pilot program is expected to wrap up early next year and a full medical cannabis system is expected to be implemented. We are pleased to be the sole flower supplier to the pilot trial And when the market unfolds, we expect to be a key player. It should be clear that our regulatory expertise, backed by our unwavering commitment to science, breeding, and genetics, sets us apart and positions us to win in new medical and recreational markets when they open. Below the revenue line, the intersection of our cultivation science, focus on operational expertise, and efficient EU GMP facilities continues to drive our cost per gram and per unit costs lower. And of course, we are committed to meeting our ongoing cost optimization targets. We talked last earnings call about a further $40 million of annual savings, which is progressing nicely. And we expect to see the impact of these reductions fully through the back half of this fiscal year. I'm sure that our track record on top line execution and expense management should give everyone confidence that we will generate positive pre-cash flow in calendar 2024. It's truly an exciting time for Aurora, our shareholders, and our employees. And with that, I would now like to turn the call over to Glenn for a detailed financial review.