GURU Organic Energy Corp.

Welcome to the Guru Organic Energy Second Quarter 2024 Results Conference Call and Webcast, being recorded today, June 13, 2024, 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 difficulties hearing the conference, Please press star followed by zero for operator assistance at any time. Guru's press release, MD&A, and financial statements are available in the investor section 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 about 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 will now turn the call over to Carl Goyette, Guru's Chief Executive Officer.

Thank you, Operator. Bonjour à tous. Good morning, everyone, and welcome to our earnings call. Joining me this morning is our CFO, Angie Serath. For those who are following the webcast, you can turn the presentation to slide five. Guru has now achieved its fifth consecutive quarter of stop-line growth with net revenue of $8 million and a 19% increase in year-to-date net revenue to reach $15.1 million. This was achieved despite the inventory adjustments by our exclusive Canadian distributor, which impacted Q2 net revenues. U.S. sales were the primary driver behind the quarter's performance, increasing 143% to $2.7 million. Top performing channels were the Wholesale Club and Amazon, where Guru ranks as the number one organic energy drink. Our performance in the U.S. market is another indication that our differentiated brand has the potential to grow at a faster pace. Retail sales also performed well in Quebec and at select grocery banners in major urban centers in other Canadian provinces, which I'll discuss in more detail on the next slide. While our Q2 results were impacted by inventory adjustments by our exclusive Canadian distributor, underlying demand for our energy drinks remained strong in most of our sales channels. We're also seeing good momentum with the recent launch of Peach Mango Punch and our first zero-sugar product, Zero Wild Berry. These innovations delivered a record-breaking performance in a leading grocery banner, reaching a combined market share of 5.2% in the first few weeks. Turning to slide six, Guru continues to lead as one of the fastest growing brands in Canada, outside of Quebec, in both dollar and unit sales growth over the last 52 weeks. Consumer demand in both tracked and untracked channels grew 18% in the first half of the year. This result is backed by increased sales in the wholesale club and general merchandise channels, which reached a remarkable 32% market share in Quebec in the last 12 weeks. fueled by our excellent growth at Costco. We believe this strong performance will create new opportunities in other Canadian provinces. Another remarkable achievement is reaching 17% market share on Amazon in Canada. In addition, our latest innovations are performing at record levels. Zuru has gained over 2% market share in Quebec in the last two months, with the launch of Peach Mango Punch and Zero Wild Berries. This includes a combined market share of 3.2% of these two innovations, surpassing the performance of our fruit punch innovation last year. Major urban centers, such as Toronto and Vancouver, are showing a solid performance, outperforming their provincial counterparts, roughly doubling our market share in these urban areas versus remainder of province. This insight supports our strategic decision to focus on key urban hubs across Canada. As we look forward, our confidence in the Canadian market outlook through 2024 remains high, supported by the aggressive launch of two innovations, strong execution at the store level and robust displays programs nationwide, all complemented by targeted marketing programs and strategic brand ambassador partnerships. On the social media side, for example, we began using our new voice, along with our revitalized brand for the launch of Peach Manga Punch. This initiative achieved highest engagement to date, particularly in key urban centers such as Vancouver and Toronto, further validating our decision to target these hubs. Q3 2024 will also be the subject of our exciting brand revitalization coming to life. across our entire Guru line as the new packaging starts to appear at retail. Let's turn to our strong U.S. performance on slide seven. Q2 results in the U.S. were driven by continued strong performance on Amazon and our two rotational programs at Costco in Los Angeles and in the Midwest. Sales on Amazon more than doubled versus same period last year, driven by the recent launch of Fruit Punch and Peach Mango Punch. Nearly 50% of our customers on Amazon were repeat customers with very high levels of loyalty to the Guru brand. The number of Guru customers on Amazon is also steadily increasing each quarter as we continue to attract a growing number of new-to-brand consumers. On the retail side, we completed our two US rotational programs at Costco in Q2. Based on the valuable lessons we've learned, We are committed to further developing and strategically targeting the channel. By focusing our efforts here, we can continue to drive growth and confident that we will secure other rotations or roadshows in the future. Whole Foods Market listed Tropical Punch in over 500 stores nationwide in April. We believe this listing, along with the recent launch of Fruit Punch and Peach Mango Punch in many natural food banners, will help continue momentum in this segment and contribute to growth. This is supported by the latest SPINS numbers for the natural food channel, which show a 10% rise for the last 52 weeks period, and a faster 14% jump in the latest four weeks versus the prior period. Whole Foods' 52-week trend is also accelerating based on its most recent 12-week performance of 11%. Finally, in the fall, based on the most recent success of the launch of Zero Wild Berry in Canada, we will be launching, in the U.S., Zero Wild Berry, along with two new flavors. We have high expectations since the zero sugar category has performed extremely well in the U.S., and our two new products offer clear differentiation with natural caffeine, zero sucralose, and zero aspartame. I will now turn the call to Ingi to discuss our financial results in more details. Angie, over to you.

Thank you, Carl, and good morning, everyone. Turning to slide nine. Net revenue in Q2 increased to $8 million from $7.7 million a year ago, despite inventory adjustments by our exclusive Canadian distributor. Sales in the U.S. grew by 143% to $2.7 million from $1.1 million in Q2 2022. driven by a significant increase in the wholesale club channel and on Amazon, where Guru ranks as the number one organic energy drink. In Canada, sales decreased to $5.2 million from $6.6 million in Q2 2023, primarily as a result of inventory adjustments at our exclusive Canadian distributor. Gross profit increased to $4.5 million from $4.1 million in Q2 2023. Gross margin rose to 55.8% compared to 53.1% for the same quarter last year, driven by pricing dynamics as well as a reduction in input costs. SG&E was $7.5 million compared to $7.1 million in Q2 2023. Selling and marketing expenses increased marginally to $4.9 million from $4.7 million in Q2 2023 as the company started the marketing campaign for the new products launched in Canada and supported the U.S. Wholesale Club rotational program with in-store activations. Net loss for the second quarter totaled $2.7 million, similar to the same quarter last year. The stable net loss primarily reflects the higher net revenues and gross profits realized in Q2 2024, offset by the launch of de-innovations. Adjusted EBITDA amounted to a loss of $2.7 million compared to a loss of $2.5 million for the same period last year. As at April 30, 2024, Google had cash, cash equivalent, and short-term investments of $28.2 million and unused credit facilities of $10 million. We believe that the ongoing prudent management of our financial resources will contribute greatly to our goal of an accelerated return to profitability.