Entourage Health Corp

Good morning, everyone, and welcome to the Entourage Health Corp First Quarter 2022 Results Conference Call. At this time, participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity for analysts and members of the media to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. A replay of this call will be available at the Entourage Health website later today and will remain posted for the next 90 days. I would now like to turn the conference over to Marianela de la Barrera, Senior Vice President, Communications and Corporate Affairs with Entourage Health. Please go ahead, Ms. de la Barrera.

Thank you, Cha, and good morning, everyone. Welcome to Entourage Health's first quarter 2022 results conference call. Please note this call is being recorded. For copies of our press releases and supporting documents filed on May 30, 2022, or to retrieve a recording of this call, please visit our investor relations page on our website at www.entouragehealthcorp.com. The replay will be available later this afternoon. With us on today's call, George Scorsese, Chief Executive Officer and Executive Chairman of Entourage Health, as well as Vani Maharaj, our Chief Financial Officer. Today, we will review the business highlights and financial results for the quarter 2022 as well as discuss recent developments. Following our formal remarks, we will open the floor for your questions. I would also like to remind everyone that during today's call, we will be discussing our business outlook and it could contain certain forward-looking statements. Actual events or results could differ materially from those expressed or implied by such forward-looking statements due to several risks and uncertainties, including those mentioned in our most recent filings with CDAR. These comments are made based on predictions and expectations as of today. Other than as required by applicable securities laws, the company does not assume any obligation to update or revise them to reflect new events or circumstances. Now at this time, it's my pleasure to introduce George Gorsuch, Entourage Health CEO. George, please go ahead.

Thanks, Marinella, and thank you to everyone for joining us this morning. It's my pleasure to be with you today. Before we begin, I would like to take a moment to welcome the newest member of our leadership team who recently joined Entourage as our Chief Financial Officer. Welcome, Vani Maharaj. Vani is a true professional who brings over 15 years of finance experience at top-tier organizations, including General Mills, Tartwell Retirement Residences, and BDO Canada. Needless to say, we're thrilled to have her on our team. A warm welcome to Vani. She'll be joining us shortly to go over our financial results. Before I get into our first quarter results, I wanted to briefly touch upon the full year 2021 performance we reported a few weeks ago. I'm happy to report that for the year, Entourage met and maintained our commercial and financial targets over the past five quarters. In fact, we did not miss a single target that we set for ourselves in 2021, and it's the same drive to execute that is fueling us for success in 2022. During 2021, we invested in our people, products, and production capabilities. With the transformation initiatives we undertook last year, we are now definitely seeing tangible benefits reflected in exponential results across the company. In short, we started off 2022 in a position of strength, With our cost structure improvements, I'm happy to share the company is on the path to financial stability. The success is due to a threefold targeted strategy. Firstly, drive revenue, then grow margin sustainability, and then manage SG&A. From a revenue point of view, I draw your attention to some great results. Similar to the fourth quarter of last year, in Q1, we continued to achieve strong sequential growth in both market share and sales. We saw increased consumer demand across all our product segments as we substantially increased our sales across all channels from previous year. All this resulted in another quarter of record revenue growth with $17.4 million of total revenue, our highest year to date. We are delivering on our customer promise by building premium brands, cultivating a culture of loyal customers, and emerging as a market leader. With over 80% of distribution across Canada, our color cannabis and Saturday cannabis products are now found in 2,000 stores coast to coast. During the first quarter, we increased our flower and pre-roll sales by close to 20% since last quarter, compared to many of our competitors who are reporting market share losses and lower revenues. In addition, our pre-rolls have been holding steady with 5% of the market share. That means one in every 20 pre-rolls sold across Canada is a colored cannabis product. Turning to medical, during the first quarter, we achieved over 20% patient growth sequentially, We are now not only expanding our base, but also increasing the offerings and solutions for patients on our platform. Our medical cannabis business is focused around a promising alternative to opiates for the treatment of chronic pain, which is the most common reason for its use. More importantly, cannabis is likely to spare patients the harmful side effects associated with opiate use. We also plan on introducing new products and services to our patients. First off, we're coming out with a chewing gum, one of a select few within the industry to launch a CBD gum for medical patients. We are listening to our patients and constantly innovating to address their needs. In addition to these milestones, in 2022, we're also seeing the results and benefits of the strong partnerships we built last year. We recently announced the Canadian debut of Boston Beer Company's new line of cannabis-infused iced tea beverages, Teapot. Teapot will be available in select Canadian provinces starting in July 2022, and will be exclusively sold and distributed into local retail markets by the Entourage team. From a gross margin point of view, our second lever, we strengthen our capabilities by acquiring Cantex, a leader in tissue culture and propagation. We're already seeing improvements with the enhancements of our THC outputs coming out in that plus 20% from our Stratford facility. It's also given us the capability to introduce new cultivars that are quickly becoming our best sellers. As an example, our newly released cultivar, Space Cake, is up to plus 24% in THC and provides a terpene profile that is garnering rave reviews, other notable milestones. We introduced automation with the capacity to deliver 2,000 pre-rolls per hour, a key factor in our expanding margins. With the addition of our Guelph microprop propagation and tissue culture site, we are housing intellectual property that will further increase our ability to offer genetic remediation services in-house and to other businesses as a profit center. This will go a long way in ensuring quality cannabis makes it out to the market. We are driving towards a more efficient and effective enterprise, focusing on improving gross margins, further cost savings. As I have said previously, gone are the days of just maximizing biomass production. At Entourage, we're only interested in producing terpene-rich cultivars with high cannabinoid counts. Our third lever is strong expense management, which Bonnie will review. Before I hand it over to Vani, I would like to recap how our strategy will generate further growth for us in 2022, as well as drive sustainable long-term profitability and success while building shareholder value. With our long-term outlook, We are seeing early signs that our strategy for developing higher potency, higher margin products is beginning to pay off. We are also dedicated to innovation with products that lead in market share, drawing on our consumer awareness in the sector and bringing legacy users to the legal market. We want to expand on our customer base by capturing new consumers who are focusing on health and wellness, a significant market expected to grow in 2022. Additionally, we will continue to increase automation and efficiencies aligned with lowering our costs to produce and achieving sustainable, profitable growth. And lastly, we expect to see full benefits of our partnerships we announced last year, specifically our Boston Beer Company collaboration as our cannabis-infused beverages teapot make their debut into the retail market. In closing, Our initiatives to drive sales growth, optimize efficiencies, drive cost discipline, and strengthen our balance sheet, including reducing our debt load, will be extremely important factors to our success in 2022. We continue to take market share for the larger industry players in all product categories, reflecting increased brand recognition, particularly with our colored cannabis and Saturday cannabis adult use brands. We fully expect to continue on this path and look forward to updating you on our progress. This concludes my opening remarks. I will now hand the call over to Vani, our CFO, who will review our financial results.