Aurora Cannabis Inc.

Hello, everyone, and welcome to the Aurora Cannabis Incorporated Fiscal First Quarter 2025 Conference Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. This conference call is being recorded today, Wednesday, August 7, 2024. If you require operator assistance, please press star then zero. I will now turn the conference over to your host, Kevin Nyland, Director, Strategic Finance and Investor Relations. Please go ahead.

Hello, everyone, and thank you for joining us. On the line with me are Miguel Martin, CEO, and Sonia King, CFO. This morning, Aurora issued a news release announcing our fiscal 2025 first quarter financial results. Our financial statements, MD&A, and its news releases are available on our IR website and can also be accessed via CDAR Plus and ACAR. In today's conference call, listeners are reminded that certain matters 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 those forward-looking statements. The risk factors that may In fact, actual results are detailed in our annual information form and other periodic filings and registration statements. These documents may similarly be accessed via CDAR flow and NCAR. On prepared remarks by Miguel and Simona, we'll conduct a question and answer session that are covering analysts. With that, I'll turn the call over to Miguel. Please go ahead.

Thank you, Kevin. Having reported our previous fiscal quarter just a few weeks ago, we'll be relatively brief in our prepared remarks. Q1 2025 was a milestone period for Aurora, and we could not be more pleased with the results that we'll be sharing with you today. We grew our top line to $83.4 million, which included record revenue in Canadian medical cannabis, international medical cannabis, and plant propagation during Bevo's seasonally strongest quarter. We take great pride in Aurora being the global medical cannabis leader within nationally legal markets. This enables us to capitalize on rapidly evolving opportunities in countries around the world. And through our investment in Bevo two years ago, we have also become an important player within North America's controlled environment agricultural industry. This generates a steady, predictable financial performance on a seasonal cadence, and we foresee more value creation through an acceleration of Bevo's business plan. Turning back to Q1, we also generated substantial growth in adjusted EBITDA to a near record high and reached positive free cash flow six months earlier than we had projected, both incredible outcomes. Note that our ability to maintain free cash flow is not linear. As Simona will explain, we do not foresee reaching positive free cash flow in Q2, but expect to be positive again in the third quarter. We also maintained our balance sheet strength through a large cash balance and no debt on our cannabis business, which provides us with maximum flexibility. These accomplishments in Q1 position us to have a record year at Aurora, led by our flagship global medical business. Let me now highlight some specific metrics related to our quarterly performance. First, net revenue rose 12% compared to the same period last year, inclusive of 24% growth in international medical cannabis. Second, adjusted gross margin was 43%, while medical cannabis adjusted gross margin reached a record 69%. Third, adjusted EBITDA rose 87%, and free cash flow was positive for the first time. And finally, we held about $182 million in cash on our balance sheet and had no cannabis debt. Our prime positioning within global medical cannabis increasingly enables us to serve the diverse needs of patients globally. Our global medical business grew 13% year over year and delivered record margins. It generated 57% of our total revenue, and 91% of our adjusted gross profit. Most of that growth stemmed from international markets. Recall also that medical cannabis has the highest gross margin of any segment within the cannabis industry. In Canada, we grew our medical cannabis market share while upholding our number one position. Revenue rose nearly 7% due to higher sales from both insurance-covered patients and self-paying patients who not only appreciate our broad product assortment, but also the steady stream of exciting next-generation cultivars. This consistent supply of innovative products is a direct result of our continued investment in science and innovation at our world-class breeding and genetics facility in Comox, British Columbia. We believe that constant innovation is an important element of why we have achieved and maintained our dominant position in our home market and, frankly, other global markets, too. A primary focus with respect to the Canadian medical market is serving insured patients, a generally stable group, but we were also encouraged by increased interest from unions and other entities that are either already or at least considering adding medical cannabis as a member benefit. We think this development, coupled with the traditional medical establishment conducting more clinical trials on a regular basis, provides great upside to opening the addressable usage market, which currently encompasses only about 1%, of the Canadian adult population. To capitalize on increased interest in medical cannabis as part of healthcare options made available to Canadians, last week we announced a commercial collaboration with Vectura Fert and Pharma, an innovator in wellness and healthcare, to launch a newly developed CBD lozenge on our leading Canadian medical cannabis platform. Our intention through this launch, which requires minimal additional capital investment on our part, is to gather patient feedback validate the product proposition, and build real-world patient data. Following the launch later this year, we expect to explore additional opportunities to commercialize other Victoria Furtin medical cannabis products. Let's now turn to the Australian market, which is rapidly becoming the largest medical market in the world outside of North America. Estimated at $400 million Australian dollars annually, Australia is our largest single market, excluding Canada. During Q1, we generated a little over $9 million in revenue in Australia, up 67% from the year-ago period, as we benefited from a full quarter contribution from our MedRelief Australia subsidiary, the number two player in the market. MedRelief Australia's product portfolio has broadened significantly thanks to Aurora's innovation platform. Since the acquisition, we have become one of the first companies to offer both pastilles and live resin cartridges in Australia. These breakthrough innovations are also being combined with expanded range of high-quality cultivars. As I referenced in our last conference call, Australia's clinician-led product distribution model and high regulatory standards are significant barriers to entry, providing a distinct advantage for Aurora. Aurora is actually one of the first Canadian LPs to receive good manufacturing practice certification from the Australian Regulatory Authority, TGA, for River and Ridge, our largest Canadian manufacturing facilities. 90% of our annual production comes from these EU GMP and TGA GMP certified facilities, enabling us to pursue growth opportunities in Australia and other key global markets. All of Aurora's markets require EU or TGA GMP certification, so Aurora's network of close to 28 tons of GMP certified manufacturing capacity is a significant advantage over our competitors. Turning to New Zealand, we celebrated our first shipment of Aurora-branded premium dried flowers during Q1. This was a significant milestone for medical cannabis accessibility, and we believe our leadership in Australia gives us an advantage in this emerging market. Let's now discuss our European operations. In Germany, a country that we've been operating in since 2018, our credentials are very strong. We hold the number two market share for flowers, the number one market share for self-payers, and have two of the top 10 cultivars by volume sales. While Germany is in the early stages of cannabis descheduling, and we do not know with certainty how quickly the market will grow, what we can say is that descheduling will continue to fuel the expansion of medical cannabis for some time, and that we expect these changes to benefit the self-payer segment the most, as it is the fastest growing channel. We are seeing more patients get prescriptions, including telemedicine, and this is beginning to positively impact volumes. We'll be able to support increased volumes through our EU GMP Canadian facilities, but also through our EU GMP facility in Lorna, Germany, which just recently was granted an expanded cultivation and unique research license under Germany's new Medical Cannabis Act. We are one of the select few companies to receive enhanced licenses, which we view as a result of our commitment to high quality manufacturing practices and a testament to our long established regulatory expertise and unparalleled commitment to compliance in Europe. Our leadership in Germany has an outsized influence on other emerging European markets, given the confidence and rigor we demonstrate to meet their high regulatory requirements. Moreover, the changes in Germany should have a broader effect on the expanding acceptance of medical cannabis and future modern frameworks across Europe, and we are poised to fulfill that growing patient demand through our expertise in developing novel, high-quality, and innovative products. Let's now turn to Poland, our second largest European market. Sales softened in Q1 compared to the same period last year due to the import permit process, but we remain bullish on the long-term opportunity. In the UK and Switzerland, we are gaining traction with patients through our proprietary cultivars and widened distribution channels, resulting in significant revenue growth in the UK and a record quarter in Switzerland. And so our plan for fiscal 2025 is to thoughtfully execute our medical-first cannabis strategy, and build on what was accomplished in Q1 and the previous year as the leader in global medical markets. By doing so, we are best able to deliver ongoing and sustainable improvements to our financial performance. I would now like to turn the call over to Simona for a detailed financial overview.