Neptune Wellness Solutions Inc.

Ladies and gentlemen, please stand by. The conference call will begin momentarily. We thank you for your patience and please do not disconnect your lines. Once again, the conference call will begin momentarily. Thank you for your patience. Thank you. Good morning, ladies and gentlemen, and welcome to the Neptune Wellness Solutions, Inc. Third Quarter 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I would now like to turn the conference over to Walter Pinto, Managing Director, KCSA. Please go ahead.

Thank you, Operator, and hello, everyone. Thank you for joining us today for the Neptune Wellness Solutions Fiscal Third Quarter 2023 Earnings Conference Call. With me today are Michael Camerata, President and Chief Executive Officer, and Raymond Silcock, Chief Financial Officer. All amounts discussed today are in U.S. dollars, and our remarks may contain forward-looking information representing our expectations as of today and may be subject to change. Today's conference call contains non-GAAP financial measures. specifically adjusted EBITDA, to provide investors with a supplemental measure of our operating performance and thus highlighting trends in our core business that may not otherwise be apparent when relying solely on GAAP financial measures. Management also uses adjusted EBITDA in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets, and assess our ability to meet our capital expenditure and working capital requirements. Adjusted EBITDA is not a recognized, defined, or standardized measure under GAAP. Our definition of adjusted EBITDA will likely differ from that used by other companies, including our peers, and therefore, comparability may be limited. Non-GAAP measures should not be considered a substitute for or in isolation from measures prepared in accordance with GAAP. Investors are encouraged to review our financial statements and disclosures in their entirety and are cautioned not to put undue reliance on non-GAAP measures and view them in conjunction with the most comparable GAAP financial measures. We do not undertake any obligation to update any forward-looking statement, except as may be required by Canadian and U.S. securities laws. Assumptions were made in preparing these forward-looking statements, which are subject to risks, as laid out in our public filings found on CDAR and EDGAR. I would now like to turn the call over to Michael.

Thank you, Walter, and hello, everyone. Today, we reported our fiscal third quarter 2023 results for the period ended December 31st, 2022. In November, we completed the divestment of our cannabis business. Operating a business with such a highly controlled substance was prohibitively expensive from an administrative standpoint, and we are already seeing the benefits from this decision. The sale included the cannabis plant in Sherbrooke, Quebec, and the cannabis brands, allowing us to gain significant cost savings and operational streamlining from redirected resources towards a simplified CPG forward corporate structure. This move also allows us to pursue relationships with investors, corporations, and banks going forward who have restrictions against working with cannabis associated businesses. And we have already taken steps toward improving our capital position, which Ray will be speaking to you about shortly. Neptune's management team and board continue to evaluate and pursue operational and structural efficiencies, all in our continued effort to maximize stakeholder value. As part of our ongoing cost saving and streamlining efforts, by the end of Q3, our headcount reduced by 66% year to date. These reductions have resulted in a cost savings of $6.6 million in annual salaries, a 46% reduction overall by the end of Q3. As well, management has asked the board to revert back to its pre-cannabis size and structure, which will also result in cost savings for the company. Neptune is now a leading consumer packaged goods company with popular products that our retail partners and consumers are excited about. We have built a portfolio of good for you, good for the planet brands with evolving product lines and opportunities for further growth into the future. Starting with Sprout, our leading organic children's food and snack brand, this brand continues to outperform based on the KPIs we monitor closely, not only achieving revenue growth for the comparable periods, but also distribution store count and fill rate, while also ramping up innovation and North American expansion in the third fiscal quarter. Sprout's successful partnership with Walmart continues. with sell-through of the half-palette seasonal display reaching 75% in eight weeks. Sprout also continued its successful expansion into Canadian retailers, recently launching into Loblaws, the largest grocer in Canada. For total store count, Sprout's distribution growth has reached nearly 28,000 doors in the United States and 1,350 doors in Canada. totaling 29,350 doors in North America. If we quickly have a look at the Nielsen data from 13 weeks ending December 31st, 2022, Sprout's sales outperformed the category by showing growth of plus 12.6%. Sprout now has the two fastest growing organic meal items nationally and the highest sales velocity in the segment. This growth was largely driven by the categories of toddler meals, snacks, and cocoa melon pouches. Our toddler snacks are growing 35.5%, which is above the category average. As well, our Cocomelon partnership has proven highly incremental to our growth, with our Yes! Yes! Veggie becoming our number one selling pouch in our total pouch portfolio. Nielsen data lasts 13 weeks. Sprout's strong fill rate of 85% for the third fiscal quarter was another key driver in its revenue growth, And so far, our Q4 fill rate is 80.3%. Sprout now has a 90% footprint in the market, with more doors to grow inside our existing footprint, as we are only at a 5% share. We plan on expanding our market share by winning more shelf space and continued product innovation. Sprout PB and Yaes are our newest innovation that launched in Q3, which continues Sprout's expansion of the snack category. The gluten-free, dairy-free, and no sugar added formulation continues Sprout's commitment towards great nutrition for kids. Their strong initial sales demonstrate the large addressable market opportunity that this category has for Sprout going forward as we continue to expand our offering. Big kid meals have continued to roll out during Q3 and we see huge potential for revenue growth outside of the baby food aisle. We are very pleased with Sprout's progress and the results achieved in the third fiscal quarter. Sprout continues to focus on scaling our offering into new product SKUs in a cost-efficient way to further increase our leadership in the organic food market. Sprout products are now available in all 50 US states, Canada, and shipping direct to consumers through the Sprout website. We have partnered with several major retailers, including Target, Walmart, leading supermarket chains, and both of the largest national pharmacy chains in the US. We are also shipping direct to consumers through the Sprout Organics website. Turning now to Biodroga. For the first three quarters into the 2023 fiscal year, Biodroga has shown strong growth year to date across all key measures. These positive numbers have resulted from launching products with both existing and new customers. In particular, our Maximal product line continues to show solid sales growth as Biodroga's most popular product. Biodroga has worked closely with its customers, existing and new, to provide scientific materials to support consumer education on the health benefits of Maximal. We continue to innovate our product offering for customers, demonstrating the flexibility of Biodroga's strategy to align with customer demands. For example, Biodroga launched a new role on product with an existing strategic customer in the third quarter. Customer retail and online sales for that product began in November. In addition, our marketing initiatives from the prior quarters, being trade shows, website and social media presence, have succeeded in bringing in new business to drive sales growth. Biodroger remains focused on cutting costs where possible to mitigate supply chain challenges, which is flowing through to margin improvement and impacting customer retention. To counteract raw material pricing increases that are being felt across the industry. Biodroga has also implemented price increases where possible to mitigate increased supply chain costs. But, with the objective of minimizing price increases to our customers, we have also aggressively bid to find alternate suppliers and manufacturers when raw material prices and toll prices become too high. Finally, we are continually expanding our manufacturing network to ensure we can pivot to alternate suppliers when needed and expand our offering based on customer market demand. Sales of our Maximal products are driven by two SKUs, Maximal 1300 MG and Maximal 650 MG. After launching these two products in 2019, demand stabilized to about 1.3 million units per month over the next two years. In 2022, building on the groundbreaking results of a clinical study showing Maximal's significant superior absorption of omega-3, Biodroga, and its customers continued to work at educating medical experts and patients about the benefits of Maximal versus standard fish oil. The study was published by the Journal of Nutrition in May 2021. These efforts have resulted in a 30% increase in average monthly sales for the year 2022 to 1.7 million units per month. In December, we further proved the credentials of Maximal's technology with a study that showed Biodrugos omega-3 supplements led to faster absorption of combined curcuminoids of 40% higher compared to other formulations. That study was published by Nutrients in December 2022. As well, our pilot Maximal luteinized study has just been completed. The study showed that the group that supplemented with maximal lutein appeared to experience a decrease in their eye prescription, while the placebo group experienced an increase in their eye prescription. The study also showed that maximal lutein supplement helps maintain good cognitive health. The results indicate that the supplementation had significant impact on cognition when compared to the placebo. This study shows how powerful Maximal can be across a range of products, and we look forward to furthering our Maximal lutein trials to gain greater statistical power. In closing, I want to emphasize that we understand the challenges that have impacted our business over the past year. We recognize that some changes have put pressure on our stakeholders, but we remain confident in our strategy and the direction we are headed. We are dedicated to delivering long-term value for all of our stakeholders and believe that our focus on our CPG brands, as evidenced by our strong Q3 results, is the right path forward. We are committed to continuing our efforts to streamline operations, manage expenses, and expand our market share in the organic food and nutraceutical space, despite the challenges of inflation and supply chain disruption. Thank you for your continued support, and now over to Ray for a deeper dive into our financial results. Ray?