Entourage Health Corp

Good morning everyone and welcome to the Entourage Health Corps second quarter 2023 results conference call. At this time, participants are in listen-only mode and the conference is being recorded. After the presentation, there'll 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 0. A replay of this call will be available on 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 Catherine Flamin, Director of Communications with Entourage Health. Please go ahead, Catherine.

Thank you, Arielle, and good morning, everyone. Welcome to Entourage Health's second quarter 2023 results conference call. Please note this call is being recorded. For copies of our press release and supporting documents filed on August 29th, 2023, or to retrieve a recording of this call, please visit the investor relations page for our website at entouragehealthcorp.com. The replay will be available later this afternoon. With us on our call today, George Scorsese, Chief Executive Officer and Executive Chair of Entourage Health, and Bonnie Marogi, the Chief Financial Officer. Today, we will review the business highlights and financial results for our second quarter, as well as discuss recent developments. Following formal remarks, we will open the floor for questions. I would also like to remind everyone that during today's call, we will discuss our business outlook, which will 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 social security laws, the company does not assume any obligation to update or revise them to reflect new events or circumstances. Now, at this time, it is my pleasure to introduce George Scorsese, Entourage Health CEO and Executive Chair. George, please go ahead.

Thank you to everyone joining us this morning. Once again, it is my pleasure to be with you today and here's to hoping you're having a wonderful summer. Before delving into our recent performance, I want to share a high level mid-year market update, aligning our strategic stance and progress. As we are all aware, the initial months of this year were marked by unparalleled challenges. The external landscape grappled with elevated inflation and deceleration in the global growth that rippled across industries. Concurrently, our sector faced its unique challenges with heightened competition, pricing pressures, and surplus supply. However, as we enter the later half of the year, Entourage stands strong with a promising narrative Our strategy has weathered the storm, aligned effectively amidst inflationary trends and operational complexities, and we are starting to see the market turn. This is where I want to begin this Entourage recap and journey with our messaging today. In the later part of 2022, we initiated our business transformation plan, recognizing the necessity to pivot. After careful consideration, we determined that collaborating with a reputable third-party supplier was the optimal path forward. The tangible benefits of our growth strategy are progressively taking shape, evidenced by reduced expenses, notable enhancements in our gross margin, and an upswing in our cash performance. This meticulous and comprehensive approach is directing us toward a more streamlined and effective operation. Envisioning an annualized cost savings exceeding $10 million represents a cautious estimate, underscoring the prospect of achieving even more substantial advantages. The second quarter positioned us strongly, expanding on this. I would like to briefly highlight some of our financial accomplishments, a topic that Vani will delve into more comprehensively in just a moment. Our enhanced gross margin is evidence of our ability to maximize the value of each revenue dollar by eliminating expenditures wherever possible and fine-tuning processes. We are not only effectively managing costs, but have also achieved remarkable gross margin of 21% in Q2 2023. This is a significant leap from 5% recorded in Q2 2022. Notably, our cost of goods, our COGS, has exhibited a steady decline, surpassing $1 million in savings. While our strategic efforts in streamlining selling, general and administrative expenses has resulted in a substantial 13% reduction. Alongside these accomplishments, our EBITDA has seen a 28% improvement. Our fiscal understanding is mirrored in the vitality of our cash performance. The cost reduction measures have orchestrated an improved cash flow and undeniable gauge of financial stability. This is pivotal in fulfilling our commitments and seizing opportunities. Additionally, we orchestrated significant enhancements to our capital structure, debt management, and liquidity position throughout the quarter. Our valued partner Leuna Pension Fund supported the company with a further $14.6 million in repayment of the remaining balance of our BMO loan after the sale of the Strathroy facility. These early outcomes are a testament to the collective dedication of the team and our unwavering commitment to fiscal responsibilities. As we witness the benefits, we have an opportunity to ensure a secure and thriving future for our business in the cannabis industry. Now, let's move on to our commercial objectives. Again, although we're seeing shortfalls in the industry, the cannabis market is showing a positive trajectory. In fact, by 2027, the Canadian cannabis industry is expected to be worth $8.8 billion, with the biggest markets being Ontario and Alberta. Ontario is a particular province of opportunity as it is also expected to lead growth in 2023 with a provincial compound annual growth rate of over 20%. Let's dive into this more and how we are responding to this market growth. First up, The adult use market. While we have a diverse portfolio of products, we noted early in the year that premium flower and pre-roll market segments are the two fastest growing segments. In fact, our overall pre-market alone increased 45% year over year. This is outstanding. Our pre-roll sales accounted for 65% of our adult use total revenue. We stand steady at market share of 3% overall. Our color pre-rolls are a top five brand across Canada. This demonstrates a strong demand for and popularity of our pre-roll offerings, solidifying our position as a leading player in this category and market. In response to our budget-conscious consumers, we have recently unveiled Dimebag branded pre-rolls, just released last week, and we're already making a splash across Ontario. These new additions are strategically designed to enhance the existing offerings of colour and Saturday cannabis brands, further enriching the company's growing product line. Our partnership with our third-party supplier contract coupled with our premium production are poised to satisfy the surging demand for our brands, facilitating growth in the Canadian marketplace. Our pre-roll success has been fueling our distribution drive, producing over 1.4 million pre-rolls monthly, well on our way to our target of 2 million. Now, I want to take a pause here to make something very clear. We pride ourselves on producing quality products. It is important to emphasize our dedication to consumer research. Our continuous commitment to enhancing product quality through data evaluation and market analysis reflects the strong demand for our offerings, our relentless pursuit, and further supporting by valuable insights gained from consumer data points and recent reviews. Notably, a recent lit research partnership gathered customer reviews and highlighted an impressive 80% average approval rating for the quality, taste, aroma, and overall experience of some of our leading cultivars, underscoring the impact of our focus on consumer preferences and satisfaction. Having established brand loyalty in the market, we are now capitalizing on this opportunity as our color cannabis and Saturday cannabis products flourish, adorning the shelves of over 2,100 stores across Canada. Turning our attention to the medical segment, we experienced the anticipated seasonal decline in sales from Q2 to Q1. However, our efforts in customer patient acquisition and renewal have shown growth, supported by our extensive portfolio of 45-plus products, including novel cannabinoid profiles such as CBG and CBN. Additionally, we are excited about our upcoming collaboration with Remedos, introducing a line of controlled delivery inhaler products to the medical market. Q2 marked a milestone for the company with a seamless sale, execution and fulfillment of its first international order, an impressive 100 kilograms of bulk medicinal cannabis dispatched to Australia through a partnership with Life Australia. Four of the company's premium strains will now be available to medicinal cannabis patients through life, cementing our global market presence and accelerating our strategic growth agenda, as well as our international expansion. For us to provide safe, reputable, high-quality cannabis products, we continue to put the consumer and patient at the center of everything we do by ensuring we understand them. In addition to this data-driven approach, our innovative pipeline provides the right products for the market at the right time. Before passing it over to Vani, a brief recap. Entourage's growth journey remains steady. Our strategic blueprint for 2023 and beyond focuses on margin amplification, revenue growth, and pioneering product innovation. With that, I conclude my opening remarks. I will now turn it over to Vani, our CFO, to provide an overview of our financial performance for the period.