Clever Leaves Holdings Inc.

I believe it's third quarter 2023 earnings conference call. All participants will be in listening mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, we have the opportunity to ask questions. Please note that this event is being recorded. I'd like to turn the call over to Ms. Jackie Kester, Director of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss CleverLeaf's financial results for the third quarter ended September 30th, 2023. Joining us today are CleverLeaf CEO, Andres Fajardo, and the company's CFO, Hank Hague. Before I introduce Andres, I remind you that during today's call, including the question and answer session, statements that are not historical facts, including any projections or guidance, Statements regarding future events or future financial performance or statements of intent or belief are forward-looking statements and are covered by the safe harbor disclaimers contained in today's press release and the company's public filings with the SEC. Actual outcomes and results may differ materially from what is expressed in or implied by these forward-looking statements. Specifically, please refer to the company's Form 10-Q for the quarter ended September 30, 2023, which was filed prior to this call as well as other filings made by clever leads with the SEC from time to time. These filings identify factors that could cause results to differ materially in those forward-looking statements. Please also note that during this call, management will be disclosing adjusted EBITDA, adjusted gross profit, and adjusted gross margin. These are non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures and a statement disclosing the reasons why company management believes that adjusted EBITDA, adjusted gross profit, and adjusted gross margin provide useful information to investors regarding the company's financial condition and results of operations are included in today's press release that is posted on the company's website. With that, I will turn the call over to Andres.

Thank you, Jackie, and good afternoon, everyone. Through the third quarter, we continue to make progress on our strategic commercial production and capital efficiency initiatives. We supported ongoing demand strength for our cannabinoid extracts and continued refining our Colombian flour, driving 135% year-over-year growth in our cannabinoid revenues. In our non-cannabinoid business, we have maintained our margin performance and delivered 6% year-over-year revenue growth. Within this segment, we have continued to strengthen our relationship with the food drug mass channel, optimize our go-to-market model for the specialty channel, and grow our direct-to-consumer sales. We further reinforced our leaner, more efficient cost and capital structure in Q3, benefiting from the sale of our Portuguese processing asset and the cost reduction initiatives we've put in place over the past year. Our performance through the first three quarters of 2023 is a testament to the strategic improvements we've made to strengthen our position in the global medical cannabis supply chain. I will discuss each of our three key strategic areas of profitable growth. our optimized cash management, our focused commercial strategy, and our low-cost, high-quality production in Colombia. Starting with cash management, our quarter end balance represents a net gain relative to the end of last quarter. We closed the third quarter with $6.5 million compared to $5.1 million at the end of Q2 of this year, demonstrating our success with reducing our quarter-to-quarter cash burn and creating a leaner expense structure for the business. In addition, our debt obligations have remained low since the second quarter of last year in which the company's debt was reduced from $22.6 million in Q1 2022 to $2.1 million in Q2 2022, thereby yielding annual cash interest expense savings in future years. At September 30th of this year, our total debt was $1.3 million. On an ongoing basis, we are seeing the improved savings generated by our work to rights as our labor force, transition our production operations solely to Colombia, and leverage our extensive and fully built-out Colombian operation infrastructure. In fact, our progress on this front has helped facilitate the positive adjustment we have made to the full-year CAPEX expectation for 2023, which we will discuss later in the call. As a reminder, a significant contributor to our third quarter balance sheet improvement was the July 5th sale of our Portuguese post-harvest asset to Terra Verde, LDA, an affiliate of Curaleaf Holdings. The transaction resulted in gross proceeds of $2.7 million, representing both an infusion of additional non-dilutive capital and an important milestone in the wind-down of our Portuguese operations. The broader wind-down process has been substantially completed, positioning us to drive continued expense improvements through the remainder of Q4. At October 31, 2023, we had a cash balance of $6.2 million. As Hank will describe in greater detail, we have since further enhanced our liquidity through the post-Q3 sale of our remaining stake in Tansativa, which we disclosed on October 23rd. one of our wholly-owned subsidiaries, Northern Swan Deutschland Holdings, has agreed to sell its remaining CanSativa shares back to CanSativa and to EIP Entrepreneurial Investments, GmbH, or EIP. The sale resulted in proceeds of approximately $1.9 million. We would like to thank CanSativa and EIP for their partnership in the transaction, and we look forward to leveraging our other strong pathways to the German market as we develop our commercial opportunities in the region. Turning to our commercial strategy, we have maintained our focus on our core target markets, which continue to be Australia, Germany, Brazil, Israel, the United Kingdom, and Colombia. In July, we announced that we expanded our agreement with Australian Natural Therapeutics Group, or ANTG, to include our Colombian flour. The flour products are now available to Australian medical patients through pharmacy outlets throughout the country under ANTG's Global Selects brand portfolio. As a whole, the Australian cannabis market has seen robust growth through the first half of this year, with authorized prescriber medical cannabis approvals growing over 120% year over year, according to data from Australia's Medicine and Therapeutic Regulatory Agency, the Therapeutic Goods Administration. We are proud of how we have built upon our flowers traction in the Australian market, and we continue to receive positive reception for our most recent strains. Our next train is currently on track to launch in Australia during the fourth quarter. Australia and Brazil have continued to be the strongest markets for our expat products. building upon our approved product shipments under RDC 327 in Brazil and our growing base of supply partnerships in the other markets. In our work to support our partners and mitigate any potential business impacts, we are closely monitoring news surrounding the Israel-Hamas war. Current conditions have posed shipping, transportation, and related logistic challenges in the region that we are navigating with our partners in real time. While our collective visibility remains limited, we are working to stay flexible for our partners and ensure that patients receive the medicine they need. Our thoughts are with everyone who is affected by the war. We are also working diligently to grow our commercial footprint in the United Kingdom and Germany. Similar to Australia, the UK has seen strong growth in its medical cannabis market this year, with the government's Home Office reporting that medical cannabis imports have tripled in volume year over year. In Germany, we continue to view our branded flower product and our existing B2B partnerships in the region as key entry points for our Colombian flower shipments. We are focused on positioning our product along these lines as we monitor further developments in the regulatory evolution of the country's cannabis market. To conclude by reviewing our Colombian production operations, we have continued to focus our harvest on cultivating THC flower for export. while planting some new CBD hemp crops to ensure we have the inventory to address demand for our extract products. We continue to keep our harvest skewed towards THC flower and keep overall output more closely aligned with demand. From a strain development perspective, we believe we remain on track to complete two additional strains by the end of this year and have made solid progress in our early cultivation work with Pretorian Global. The strains we developed through this partnership are expected to benefit our market penetration strategy across our target markets. More broadly, we expect to continue expanding our flower portfolio throughout 2024 as we work to refine THC levels, organoleptic characteristics, and other key flower qualities in light with patient needs. With our mature production operations in Colombia, we have worked to build and sustain our industry reputation for high-quality products and pharmaceutical-grade production standards. Importantly, many of the practices that maximize the quality and efficiency of our operations have also demonstrated our commitment to sustainability. For example, The environmental advantages from receiving 12 hours of natural sunlight and cultivating at a high elevation have not only benefited production costs, but also allowed us to optimize our energy and water usage as well as entirely eliminate the need for pesticides. As evidence of our leadership on this front, we were awarded the International Declaration of Carbon Neutrality by the 100% Carbon Neutral Program for our active commitment to environmental sustainability and climate change mitigation in late August. To date, we believe we are one of the first non-vertically integrated medicinal cannabis companies worldwide to have achieved international certification for carbon neutrality. In addition to leveraging our environmental advantages, we have implemented various measures to curb carbon emissions and preserve natural resources, including methods of harnessing solar energy and optimizing waste management practice. In fact, we currently repurpose or recycle more than 50% of waste into productive processes. Our dedication to and track record in environmental sustainability demonstrates the high-quality standards of our products and processes. Producing medical-grade cannabinoid products at scale for a global base of patients requires a careful strategic matrix. We have had to be nimble in adapting to market-specific requirements, decisive in implementing key capital optimization measures, and comprehensive in ramping our columnar operations to support existing extract momentum while building traction for our flower exports. The work to strengthen this foundation has been gradual, yet steady. As we move further into Q4 and prepare for the year ahead, we aim to continue building upon our growing base of international partnerships, as well as the advantages of our extensive Colombian production base and linear corporate infrastructure. I am proud of the progress we have made through the third quarter of this year, and we expect to continue leveraging our significantly improved capital efficiencies and growing commercial traction through the end of this year into the next. I'd now like to turn the call over to our CFO, Hank Haag, who will discuss our third quarter financial performance. Hank?