GURU Organic Energy Corp.

welcome to the guru organic energy third quarter fiscal 2022 resource conference call and webcast being recorded today september 14 2022 at 10 a.m eastern time at this time all participants are in a listen-only mode following management's presentation there will be a question and answer session with financial analysts instructions will be provided at that time for you to queue up for questions if anyone has any difficulty chairing the conference please press star zero for operator assistance at any time. Guru's press release MDA and financial statements are available in the investor session of its website and on CDAR. During the call, the company may refer to certain non-GAAP measures. Reconciliations are available in its MD&A. Also note that all financial figures are expressed in Canadian dollars unless otherwise indicated. I would also like to remind you that today's presentation may contain forward-looking statements that Guru's current and future plans, expectations, and intentions, results, level of activity, performance, goals, or achievements, or other future events or developments. As such, please take a moment to read the disclaimer on forward-looking statements on slide two of the presentation. I would now like to turn the call over to Carl Boyette, Guru's Chief Executive Officer. One moment.

Thank you, operator. Bonjour à tous. Good morning, everyone, and welcome to our earnings call. Joining me this morning is our CFO, Indy Seras. This past quarter, we continued to execute on our strategy to replicate our success in Quebec across Canada and more selectively into the United States. At the risk of being cliche, this is a marathon, not a sprint. This is a long process filled with hard work, small wins, and often challenges, but we are already starting to make headway. Consumer scan data in Canada shown strong year-over-year sales increases of more than 35% for the last few months. In parallel, our retail internal shipments in Canada increased by 12% in the three months ended July 31st, compared to the same period last year. This 23% gap between consumer purchases in our shipments can be mainly explained by inventory depletion at retail and industry-wide labor and logistics disruption. We are confident that in the future, growth in shipments will return to similar growth levels as consumers can data. Despite this growth in shipments, net revenues contracted this quarter versus the same quarter last year as a result of our new distribution and sales model in Canada. We have a strong distribution partner that is committed to Google in Canada and is as confident as ever in our go-to-market plans, our in-store marketing activities, and hence our ability to meet consumer demands. Fortunately, our sector-leading gross margins of over 54% remain steady as we continue our careful supply chain management and prudent pricing practices. With no issues from a raw material procurement perspective, In terms of product pricing, these are being accepted by consumers as we keep pace with the category. During Q3, we ran our coast-to-coast Good Energy for the Everyday Marketing campaign, our largest Canadian campaign to date. It featured a strong mix of out-of-home, TV, and digital elements. In addition, the campaign included one of our most comprehensive summer sponsorship and sampling programs, with over 30 events from May to September across Canada to support our rapid pan-national distribution in retail. We are also an official sponsor of CTV's The Amazing Race, the most watched summer series. As mentioned previously, consumer purchase scan data showed strong year-over-year sales increases of over 35% this summer. Select Canadian retailers outside of Quebec primarily in urban areas where our consumers were targeted by our marketing campaign, are beginning to report increases in market share. Some urban banners are even exceeding 3%, sometimes placing Guru as the number four energy drink brand. This is consistent with our path to growth in Quebec, which led us today to the number two position in the leading Quebec grocery banner, reaching over 22% market share. our distribution partner is now outselling Forecast, which is a strong indicator of increased brand awareness and conversion translating into shipments. As with previous campaigns, we ran another round of research, the most significant to date, including a sample of 4,000 consumers in English Canada. Not only are the results positive, but also confirm our strategy and the momentum we're starting to see in consumer scan data. In the results, we saw significant improvement in Guru brand conversion in English Canada, reaching 4% consumer share. In our primary consumer segment, we are seeing improved awareness at 31% and a conversion to regular consumption at 6% consumer share. Like in Quebec, the Guru brand in English Canada is growing the category by attracting new consumers to the energy drink industry. The goal of our marketing efforts has been to communicate the Guru brand's unique positioning for its progressive consumers, and we are pleased to see that the consumer understands our strongly differentiated product and brand positioning. Most importantly, the benefits of these sequential market research reports that they provide us key insights on drivers of awareness trial and conversion that will allow us to refine and optimize our marketing investments in the future after quarter end we continued our marketing investments we announced our first major sports partnership and became the exclusive energy drink for the canadian elite basketball league championship weekend in ottawa The partnership included a comprehensive media plan that consisted of advertising and fun-filled activation opportunities. Then, just this month, we launched our Back to Reality national marketing campaign, which is aimed at bringing good energy to progressive urban consumers across Canada through the fall. In Quebec, this includes our latest seasonal launch with Occupation WTV reality show, a long-standing sponsorship relationship which continues to serve us well in this market. U.S. performance held steady during the quarter as we continue to hold the number one energy drink position in the natural sector in California. According to SPINS, which measures Guru's U.S. consumer scan data, we experienced 23% growth in California in Q3 2023, 2022 versus Q3 2021, showing continued strength in the US market. We are also aiming to expand our distribution network in that space, as the California lifestyle and progressive value is the perfect match for our brand and target audience. In alignment with this, we are participating in a 12-week Costco California Roadshow. While it's still early in the program, consumer response and sales have been very positive. In August, we launched our Guayusa Tropical Punch in targeted banners in the U.S., including the Costco Roadshow as of last week. Many more banners will be launching next spring during the planogram reset period. These activities are being undertaken to replicate the success of what is today the number one ranked 2022 innovation skew in Quebec. As for online, we continue to show strong sales performance and over 60% growth in the quarter compared to the same period last year. To improve profitability in the segment, we have reduced our investment in consumer acquisitions. I will now turn the call to NG, who will provide you with more details on our Q3 results. NG, over to you.

Thank you, Carl, and good morning, everyone. I'll begin with net revenue for the quarter. which was $7.7 million compared to 8 million for the same three months in 2021. Despite the lower revenue, shipment volume for the quarter increased by 14% from the same quarter a year ago due to higher velocities and increased points of sale in Canada. As such, the decline in quarterly revenue is attributed to the change in our business model in Canada, as well as industry-wide labour shortages and logistic constraints. For the nine-month period, net revenue increased by 3% to $22.3 million from $21.7 million for the same period in 2021, as overall shipment volume grew by 20%. U.S. sales were $1 million in Q3 2022 compared to $1.1 million in the same quarter in 2021. For the third quarter, gross profit totalled $4.2 million compared to $5 million last year, and gross margin was 54.8% in Q3 2022 compared to 62.6% in Q3 2021. For the nine-month period, gross profit totaled $12.2 million for 2022 compared to $13.6 million for fiscal 2021, while gross margin for the nine-month period was 54.5% in 2022 compared to 62.5% in 2021. The year-over-year decrease in gross margin was anticipated due to the change in our Canadian distribution, sales, and merchandising model, and comprised distribution, selling, and merchandising fees, a portion of which was previously categorized as SG&A expenses. Gross margin was also slightly impacted by higher product costs driven by inflationary pressures on input and transportation costs. SG&A was $11 million, for the third quarter of fiscal 2022 compared to $7.2 million for the same period in fiscal 2021. In Q3 2022, selling and marketing expenses accounted for 76% or $8.5 million of DSG&E. We will continue to invest in our brands moving forward while optimizing spend based on market research insights mentioned by Carl earlier to return to profitability. Adjusted EBITDA was a loss of $6.5 million for the quarter, compared to a loss of $2 million for the same three-month period in the previous year. The decline was largely a result of higher selling and marketing expenses, and to a lesser extent, lower growth margins, as explained above. Net loss for the quarter totaled $6.5 million, or $0.20 per share, compared to a net loss of $2 million, or $0.07 per share, for the same period a year ago. The increase in net loss reflects the lower margins and the additional costs associated with the brand, field, and trade marketing activities. Just before the end of the quarter, on July 21st, we announced our intention to enter a normal course issuer bid. The NCID began July 25th, 2022, and runs for one year. The NCID allowed for the purchase for cancellation of up to 500,000 shares. which represents about 1.5% of our shares outstanding as at July 14, 2022. To date, we have purchased 8,460 shares under the program. While our capital will continue to be primarily aimed at growing our market share to generate sustainable long-term growth, having an NCIB program in place provides us with flexibility to repurchase shares on an opportunistic basis. As at July 31st, 2022, our financial position was very strong, with cash and cash equivalents and short-term investments of $48 million and unused credit facilities totaling about $10 million. This will allow us to continue to pursue our goals, objectives, and the related investments required for our planned return to profitability. Kyle, back to you for your concluding remarks.