Aurora Cannabis Inc.

Greetings and welcome to the Aurora Cannabis Third 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, February 8, 2024. I would now like to turn the conference over to your host, Anant Krishna, Vice President, Corporate Development and Strategy. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us today. On the line with me are Miguel Martin, CEO, and Glen Ibik, CFO. This morning, Aurora issued a news release announcing our fiscal 2024 third quarter financial results and a separate news release announcing the acquisition of Medrelief Australia. These separate news releases and our fiscal Q3 2024 financial statements and MD&A are available on our IR website and can also be accessed by CDAR Plus and EDGAR. In addition, you will find a supplemental information deck on our IR website. Listeners are reminded that certain matters on today's conference call could constitute forward-looking statements that are subject to 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 Plus and EDGAR. Following prepared remarks by Miguel and Glenn, we will conduct a question and answer session with our covering analysts. With that, I will turn the call over now to Miguel. Please go ahead.

Thank you, Nance. Our quarterly performance demonstrated not only the strength of Aurora's business model, built primarily upon global leadership and high-margin medical cannabis, but also our financial discipline. Our highlights include, first, strong revenue of over $64 million, of several percentage points, and inclusive of 41% growth in our international medical cannabis segment. Second, industry-leading adjusted gross margin of 50%, also up from the year-ago period. Third, a record adjusted EBITDA, representing our fifth consecutive quarter of positive adjusted EBITDA. Fourth, recall that we have also one of the strongest balance sheets of any Canadian LP, and our global cannabis business will be debt-free later this month. All of these items move us closer towards our goal of generating positive pre-cash flow in calendar 2024. But before delving into Q3 into greater detail, I first want to review our announcement today regarding the acquisition of the remaining 90% equity interest in MedRelief Australia that Aurora does not currently own. They are a leading distributor of metal cannabis products in Australia. The company was acquired at a total enterprise value of $44 million Canadian dollars, of which $8.3 million Canadian dollars was paid in cash, and the remainder satisfied by the issuance of Aurora shares. This transaction was thoughtfully structured to preserve the strength of Aurora's balance sheet and represents a strategic milestone in Aurora's global cannabis leadership, as we have now become the largest platform in the nationally legal cannabis industry in the world. Acquiring MedRelief Australia positions us to deliver double-digit increases to the profitability of our Australian business model through higher revenue contributions and higher gross margins. It further aligns this business with other key profitable international markets, most notably Germany, Poland, and the UK. It is immediately accretive to our adjusted EBITDA and accelerates our path to positive free cash flow generation before the end of the calendar year. We first partnered with MedRelief Australia back in 2017, and since that time, we've been an active contributor to its growth by leveraging our pharmaceutical-grade cultivation and science-driven approach to product innovation. Like Germany, the Australian market is characterized by a clinician-led, traditional pharma-like product distribution model that closely aligns with Aurora's operational success. The high regulatory standards of the Therapeutic Goods Authority makes Australia a challenging market for new entrants, while providing an advantage to companies like Aurora who are able to meet them. Medrelief Australia already holds the number two position in medical cannabis in Australia, having already invested in clinician education while leveraging Aurora's comprehensive product portfolio to provide best-in-class medicine and support for this rapidly growing patient base. We are extremely excited about our opportunity within the rapidly growing $400 million Australian market. This would make it the largest medical market in the world outside of North America. We welcome Medrelip Australia fully into the Aurora fold and know that we'll be able to do great things together. Now let's look more deeply into our business. In Canada, we maintained our number one position in the medical market and continue to grow our market share through our broad and attractive product assortment, positive sales mix, and most importantly, product innovation. Amid a continuous disruption in this market, we know that our commitment to launching a steady stream of exciting new products is critical to holding and growing our domestic medical share. Our next-generation cultivars can and often are made available across Europe and Australia, providing patients with some of the highest potency and most appealing offerings in these international markets. Of course, our ability to offer pharma-grade products to global patients is only made possible by our competitive advantage of having built a production network of indoor EU GMP certified facilities that are managed by teams who have deep experience in pharmaceutical production. As we already discussed Australia earlier, let's now delve into our European operations as we generated sales in a record seven European countries, Germany, Poland, the UK, France, Switzerland, Malta, and the Czech Republic. In Germany, our largest European market, where we've been operating since 2017, we are one of only three companies with a domestic production facility. We have the number two market share for flowers, according to the latest data, and the number one market share for self-payers. We also had three of the top ten cultivars in the country by volume sales. We are supportive of the legislative process that is moving towards the descheduling of medical cannabis and the potential wider legalization of adult use cannabis. We are very supportive of this effort and uniquely well positioned to benefit as the number one supplier of flour to patients outside the public insurance system. In Poland, our second largest European market, Aurora earned the number two cultivar and the number two market position by volume. We are excited about the opportunities that this growing market presents. In the UK, patients are responding favorably to the launches of our next-generation cultivars, which has led to significant increase in sales in Q3 compared to Q2. In Switzerland, we are building on a successful launch in Q2, becoming a trusted favorite for patients and are currently widening distribution channels in the country. All in all, medical cannabis adjusted gross margin remains strong at 62%, as we benefit from sustainable cost reductions and improved efficiency in production operations. Turning back to Canada, our decision to strategically allocate product to higher margin medical markets resulted in a modest and expected year-over-year revenue decline in the consumer cannabis business. Still, our adjusted gross margin improved substantially versus the year-ago period because of our higher efficiency in production operations and a more favorable product mix. Finally, we exhibited the inherent benefits of a diversified model as we are expanding our reach in the controlled environment agricultural industry through Bevo. Their team is currently leveraging our cannabis facilities to move into the profitable cultivated orchids market, while their current vegetable and plant propagation business already generates a steady, predictable financial performance, albeit on a seasonal cadence. In the upcoming two to three years, we think that our shareholders will benefit from the value creation coming from this segment, as we expect the acceleration of Bevo's business plan to continue to drive revenue and EBITDA growth. All of our strategic progress over the past few years will move us towards our goal of positive free cash flow in calendar 2024. With that, I would now like to turn the call over to Glenn for a detailed financial overview.