Entourage Health Corp

Good morning, everyone, and welcome to Entourage Health Corps' first quarter 2024 results conference call. At this time, participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. To join the question queue, analysts may press star, then 1. As a reminder, this conference call is being recorded, and a replay of this call is available on the Entourage Health website later today and will remain posted for the next 30 days. I would now like to turn the conference over to Catherine Flayman, Senior Director, Communications and Corporate Affairs with Entourage Health for introductions. Please go ahead, Catherine.

Thank you, Gaylene, and good morning, everyone. Welcome to Entourage Health's first quarter 2024 results conference call. Please note this call is being recorded. For copies of our press release and supporting documents or to retrieve a recording of this call, please visit the investor relations page of our website at entouragehealthcorp.com. The replay will be available later this afternoon. With us on today's call, we have George Scorsese, Chief Executive Officer and Executive Chairman of Entourage and Bonnie Maharaj, our Chief Financial Officer. Today, we'll review the business highlights and financial results for the first quarter of 2024, as well as discuss recent developments. Following the following 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 and 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 law, the company does not assume any obligation to update or revise them to reflect new events or circumstances. At this time, it is my pleasure to introduce George Scorsese, Entourage Health CEO and Executive Chairman. George, please go ahead.

Good morning and welcome to Entourage's earnings conference call. I'm thrilled to share an overview of our first quarter financial results. we're currently in the strongest position we've ever been, showing performance in our core business. Our outlook has never been brighter, and I'm excited about Entourage's promising future. In our first quarter, we achieved $16.4 million in revenues, demonstrating a 9% year-over-year growth and a 23% sequential revenue increase from Q4 2023. This was driven by 10% growth in our adult use revenue. Our company achieved a remarkable 92% year-over-year improvement in gross profit and a record 45% gross margin, surpassing the average profit margins across the sector. We definitely reduced the cost per unit by scaling operations, which was further complemented by stringent cost management across all levels. To top it off, strategic adjustments in pricing and product optimization helped us maintain market share. And most notably, our EBITDA improved by over $4 million, a 114% increase, marking our first positive EBITDA quarter, setting our path to profitability. Although we have been quiet and laser-focused on the business, we are demonstrating our commitment to maintaining a leadership position I want to take a moment to emphasize the calculated planning and decision-making that led us here. Throughout 2023, we meticulously set the stage for the upcoming years by executing our strategic plan. We allocated our resources with precision and purpose, making difficult but absolutely necessary decisions to streamlining and simplifying the business. The result? A significant improvement in cost savings, By year end, we achieved savings of $15 million. Our exceptional Q1 performance solidifies our position, guaranteeing a successful year ahead that should instill confidence in our stakeholders about our future direction. Before I continue, I'd like to thank our teams for making this possible. Their dedication to our company's vision and execution of our strategic plan is truly inspiring. Everyone was committed to the vision of where we are today. and they fully executed. From the bottom of my heart, I want to thank every employee of this company. Throughout the remainder of the year, we will continue to drive efficiencies and reduce costs. This approach will enhance our financial stability and position us to expand our growth initiatives. By diligently managing our expenses and maintaining a disciplined approach, we will stabilize our capital structure and promote sustainable growth. Despite the typical first quarter downturn in the adult use cannabis industry, Entourage has outperformed expectations with a 10% increase in revenue. The achievement demonstrates a strong market appeal of our brands and reflects our resilience in navigating a challenging landscape. The strategic initiatives that drove us to our success, firstly, brand impact. Our recently launched brand Dimebag has swiftly captured market attention rapidly becoming the third fastest growing brand in Ontario over consecutive quarters. The recent expansion into Alberta suggests it is well on its way to replicate the success we experience in Ontario. Product mix optimization. Leveraging in-depth analysis of our product mix and a deep understanding of consumer preferences, Colour Cannabis has strategically positioned itself. We are proudly ranked as the 12th highest selling pre-roll brand across the nation. Notably, in British Columbia, Canada's second largest cannabis market, we have achieved the number two pre-roll brand status. This underscores our commitment to delivering products that resonate with our retailers and consumers alike, ensuring our prominent placement in key markets. Automation and production. Our substantial investments in pre-roll automation have significantly enhanced our production capabilities, now yielding 2.2 million pre-rolls monthly. This skill not only supports our current distribution needs, but also sets the stage for future growth. Market penetration and brand loyalty. Amidst significant brand competition, 80% of the retail outlets in key markets such as Ontario, Alberta, and British Columbia consistently carry at least one Entourage product. Impressively, half of these outlets now stock four or more of our products, signaling strong retailer confidence and growing consumer demand for our varied offerings. And lastly, but very important to our core business, is our leadership in medical. As we concentrate on boosting our revenue, let's turn our focus to the medical In the first quarter of 2024, Starseed has maintained a stable patient population, an oppressive achievement given that recent Health Canada data indicates a downturn exceeding 15% in the medical patient base industry-wide. Starseed's ability to sustain its patient numbers in such a challenging environment underscores the effectiveness of its business strategies and its resilience against negative trends impacting the sector. Starseed's strong patient Acquisition and retention practices affirm that our business model successfully navigates challenges that have led to declines for other companies in the industry. Additionally, we see significant growth opportunities in Canada. The environment allows us to strengthen our position, our expertise in medical Our commitment to an innovative product portfolio appeals to a broad range of consumers and medical patients, keeping us ahead of market trends and improving our offerings. We are well equipped to address unmet needs in the medical cannabis market, gaining market share and driving sustained growth. We are developing a roadmap for launching new products in international markets, expanding our reach and fueling our medical cannabis growth strategy. Entourage continues to monitor global regulatory reforms that create distinct opportunities in emerging markets, especially the drug reform acts from countries like the US. This achievement demonstrates our dedication to long-term growth and our ability to adapt market dynamics, reassuring our stakeholders that Entourage is surviving and thriving in this highly competitive cannabis industry. Before I hand it over to Vani, I wanted to briefly touch on the Canadian market, which is undergoing a period of significant transformation. This presents valuable opportunities for Entourage. Several established players in the industry are facing financial difficulties, and we're going to jump on these opportunities within the marketplace. Clear winners are beginning to emerge as the market undergoes consolidation and a period of cleansing.