Aurora Cannabis Inc.

Greetings and welcome to the Aurora Cannabis Inc. second quarter 2025 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, Wednesday, November 6, 2024. I would now like to turn the conference over to your host, Kevin Nyland, Director of Strategic Finance and Investor Relations. Please go ahead.

Hello, everyone, and thank you for joining us. On the line with me are Miguel Martin, Executive Chairman and CEO, and Simona King, CFO. This morning, we filed our financial statements for the second quarter of 2025, period ending September 30th, 2024, and issued a news release containing our quarterly results. Our financial statements, MD&A, and this news release are available on our IR website and can also be accessed via CDR Plus and EDGAR. 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 for 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 Simona, We will conduct a question-answer session when I co-bring out a list. With that, I'll turn the call over to Miguel. Please go ahead.

Thank you, Kevin. We had a strong Q2 and look forward to building on that momentum. Our prime positioning as a leader within nationally legal cannabis markets has set the foundation for top-line growth and higher profitability as we further penetrate existing markets such as Canada, Europe, and Australia and enter new ones as they open. In doing so, we will place more distance between ourselves and our peers by leaning into what sets Aurora apart, including, first, capitalizing on rapidly evolving global medical cannabis opportunities backed by our EU GMP manufacturing facilities, unparalleled scientific knowledge, genetics, and regulatory expertise. Second, leveraging our continued focus on operational excellence, so that we can maintain our enviable margin profile in medical cannabis, the highest margin industry segment. And third, maintaining and solidifying our balance sheet to maximize flexibility, while also continuously focusing on profitable growth, as evidenced by our record adjusted EBITDA. With that, let me now briefly share some highlights related to our quarterly results. Net revenue grew 29%, including record revenue from global medical cannabis. which itself represented 41% year-over-year growth. Within global medical cannabis, international revenue increased 93%. The contribution from high-margin international revenue exceeded that of Canadian medical cannabis for the first time and amounted to 57% of total global medical cannabis revenue. This shift demonstrates how we have successfully positioned ourselves to benefit from opportunities across the globe. which are balanced by the stability we see in the maturing Canadian market. In addition, let me touch on Bevo's performance. Bevo already has a formidable presence within North America's controlled environment agricultural industry and is significantly increasing its production capacity to support higher demand through the conversion of the Aurora Sky and Aurora Sun facilities. Even in its slower seasons, which correspond to our fiscal second and third quarters in Q2, we were able to increase revenue by a robust 21% through organic growth and increased product offerings, such as orchids arising from greater capacity. On profitability, we achieved record outcomes in adjusted gross profit and adjusted EBITDA, which is the result of our continued focus on the profitable global medical cannabis business segments. Let's now discuss our business in greater detail. Global medical cannabis is our flagship segment, serving the diverse needs of patients across multiple nationally regulated markets. It grew 41% year over year and generated 76% of our total revenue and 98% of our adjusted gross profit. Most of this growth stemmed from international markets. However, Canadian medical grew 3% and we maintained our dominant leadership position. The Canadian market remains a stable contributor to our overall medical business as we benefit from a combination of insurance-covered and self-paying patients. Our ability to remain at the forefront of the domestic medical cannabis industry is because of our ongoing investments in science and innovation, anchored by our breeding and genetics facility in Comox, British Columbia. Over time, we believe there should be upside to unlocking the addressable usage market which currently encompasses only 1% of the Canadian adult population. Canadian patients appreciate and seek out our steady stream of next-generation cultivars, along with other innovative products. And to take advantage of increased interest in medical cannabis as part of healthcare options made available to them, we launched a newly developed CBD lozenge in collaboration with Victoria Fertin Pharma. Let's now turn to our international business, beginning with Australia, our second largest market after Canada. We are number two in Australia, which is emerging as the largest medical market in the world outside of North America, sized at $400 million Australian dollars annually, according to the Pennington Institute. The Australian market's high regulatory standards represent significant barriers to entry, providing a distinct advantage to us over our competitors. Notably, we were one of the first Canadian LPs to receive good manufacturing practice certification from the Australian Regulatory Authority, TGA, for our two largest Canadian manufacturing facilities. And in fact, 90 percent of our annual production comes from these EU GMP and TGA GMP-certified facilities. In Q2, the following two factors drove our increased revenue and EBITDA contributions. First, we benefited from a full quarter contribution from MedRelief Australia as all previously sold inventory has flowed through since we completed the purchase of the remaining interest in the subsidiary in February. And second, we experienced increased sales due to a broadened product portfolio that includes pastilles, live resin cartridges, and an expanded range of high-quality cultivars. Most recently, we announced an enhanced product range of premium medical cannabis oils in Australia, which include a variety of cannabinoid ratios to support personalized treatment options for patients. Our mission with MedRelief Australia is to expand access to high-quality medical cannabis options for patients across the country. And on a related note, our leadership there gives us an advantage in expanding sales into New Zealand, a smaller but important emerging market in its own right. Turning to Europe and beginning with Germany, our operating history goes back more than six years, and our credentials are virtually unmatched, as we hold the number three market share for flour and the number two market share for insured patients. Growth in the German market is due to cannabis descheduling, which contributed to the significant increase in international medical cannabis revenue during Q2. It is clear that more patients will become registered and pharmacies will expand to support the increase in prescription volumes. In fact, there's already a visible uptick in patients, including those that are self-paying. Right now, we are focused on maintaining consistent and reliable supply of our high-quality EU GMP manufactured products to our pharmacy partners so that we can continue to meet the growing needs of German patients. And to that end, we have a considerable capacity to support higher product volumes through both our EU GMP facilities in Canada, as well as our facility in Lorna, Germany. The Lorna facility has also been granted permission to expand cultivation under Germany's new Medical Cannabis Act. And we are one of the select few companies to receive an enhanced license, exemplifying our commitment to high-quality manufacturing, long-established regulatory expertise, and unparalleled commitment to compliance. We recognize that changes in Germany are also likely to have a broader effect on the expanding acceptance of medical cannabis across Europe, and we will be ready for these opportunities. Our agility and unique set of capabilities, including expertise in meeting high regulatory requirements and cultivating high-quality products, will enable us to win as these markets develop. With that in mind, let's discuss Poland, our second-largest European market, After sales were impacted in Q1 due to the import permit process, they rebounded in Q2 because of increased permits and the continued strong demand from Polish patients for high-quality medical cannabis. In the UK, we are gaining traction with patients through our latest innovation and widened distribution channels, resulting in significant revenue growth, leading to a new record quarter for this market. We saw an increase in demand for EU GMP manufactured flour, which aligns well with 90 percent of our internal manufacturing capacity being EU and TGA GMP certified. The expansion of our latest genetics offer higher yields and a lower cost per gram to produce, which has given us the ability to significantly increase our output capacity, especially as these new cultivars begin to establish themselves in key international markets. Given the success we have made with our medical first cannabis strategy through the first half of the fiscal year, we think we are well positioned for a successful fiscal 2025. Our optimism is anchored by our commitment to delivering continued profitable growth, positive cash flow in Q3, maintaining a strong balance sheet, and operational excellence. These factors are the building blocks to being 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.