Wildpack Beverage Inc.

Hi, everyone, and welcome to Wildpac's 2023 quarter one earnings call and live corporate webinar. This is Elijah Clare, Vice President, Investor Relations for Wildpac. Wildpac is listed on the Toronto Stock Exchange or the TSXV under the symbol CANS, C-A-N-S. Joining us today are Wildpac CEO Mitch Bernard, CFO Ryan Mason, and CGO Thomas Walker. At the end of this presentation, management will address questions. If you're interested in asking questions and haven't done so already, please forward them to invest at wildpackbev.com. We will answer them in a timely fashion. Please note this presentation is being recorded today, July 26, 2023, and will soon be made available on the company's website, investor.wildpackbev.com. Before we begin, please remember our comments and responses reflect management's views as of today, July 26, 2022, and that during the course of the call, management may make forward-looking statements. Our statements involve various known and unknown risks and uncertainties, which may prove to be incorrect, and actual results may differ materially from those described in these forward-looking statements. Please refer to the text in Wildpac's press release and financial filings issued yesterday for a discussion of the risks and uncertainties associated with such forward-looking statements. Please note that the company is under no obligation to update any forward-looking statements discussed today, except as required by applicable law, and investors are cautioned not to place undue reliance on these statements. Our first quarter, 2023, results were announced prior to this webinar at all 5 p.m. Eastern time, July 25th, 2023, via press release and CDR filing. We encourage you to have the press release in front of you, which includes our financial results, metrics, and commentary. On the quarter and year, our all currency amounts discussed in the presentation are USD unless otherwise stated. Today's agenda will begin with Mitch providing an overview and highlights of the first quarter of 2023, followed by Ryan reviewing the financials to provide detailed insights into how our financial position is maturing to support our long-term strategy. And lastly, Thomas will discuss the growth in our sales. I'll now turn the presentation over to Wildpac's Chief Executive Officer, Mitch Bernard.

Thanks, Eli, and to all those who are joining us live and those that are going to listen to the reporting later. Thus far in 2023, leadership has remained focused on sales, co-packing operations, and financing. We set quarterly records in both confirmed sales orders and cans filled in the first quarter, which set us up well to complete a $25 million senior secured convertible financing with Santon following the close of the quarter. Confirmed sales orders reached record high in the second quarter of $22.9 million, which is approximately 116% year-over-year growth. Filled cans reached a record high in the first quarter of 7.8 million, which is approximately a 200% growth from the year prior. Confirmed sales orders and filled cans are an important leading indicator for our business because of how impactful operating leverage is in growing gross margin. A larger pipeline provides us greater flexibility as we scale utilization and filling demand is a heavy driver of demand in our decorating, brokering, and printing segments. With these initiatives meeting expectations, we have focused heavily on business infrastructure that connects confirmed sales orders to revenue, like inventory, shipping and receiving, project management, as a few examples. It's a good time to stop and pause and remind ourselves that what we're trying to do is solving an exceptionally challenging supply chain problem with no out-of-the-box solution. In fact, many businesses who have tried to master the complexities of the middle market supply chain have failed. Being an all-in supplier for more than 1,200 brands and almost 7,200 SKUs per year creates significant critical craft pressure, which if not managed perfectly can lead to errors, downtime, and elevated costs for not only us, but our partners. Fortunately, like most big problems, those who solve them are rewarded for their suffering with competitive advantages and disproportionate returns. We expect this disruption to be no different and all indications are there are that we're nearing the end of the tunnel and a speck of light is visible. We have typically focused on building solutions to these infrastructure bottlenecks in technology, so that we can replicate those as we scale across our business. We have also focused on developing those in line with the customer experience, which is congruent with what a 2023 business person's expectations are, that they're digital and simple. We strongly believe that the end state for a business like ours is that a customer primarily interacts with our system directly, and human intervention is only required to troubleshoot unpredictable problems. We remain steadfast in our commitment to turn this blue sky concept into a reality for our customers, and we're dedicated to doing the hard work and grinding the long yards that it takes to get there. Profit remains the only income statement metric that our leadership team talks about. With an increase in top line revenue driven by production throughput, we have seen expansion at the gross margin line beginning to flow through, which is the first step driving towards the focus of profitability. We know that gross margin has to expand substantially more to cover our generally stagnant SGA costs. Fortunately, that makes the profitability analysis mostly simple. Increased throughput on the existing fixed cost footprint. This focus has and will continue to take up most of management's bandwidth in the foreseeable future. The remainder will be spent on compression of the costs predominantly in the direct cost bucket. We have started to undertake requests for proposal across our supply chain, which have yielded some early wins, and we expect an ability to drive per unit costs down as our economies of scale continue to grow. The final thought that I will leave you with is that we've cultivated a culture at Wildpact that I believe is unrivaled in our industry for sure, and perhaps more broadly across many industries. We have a team of young, hungry, and immensely intelligent people across each segment of our business. Our tenacious pack first mentality has made things possible that most external observers said could never be done. Everything from installing a fully automated line in two weeks to rebuilding an entire division in a month. It probably sounds a little crazy, but I can honestly say that I love my 80-hour work weeks, mostly because I get to spend them with this team who truly inspire me every moment that we're together. We are building something special, and while I recognize it's taking a lot longer than we all hoped, I remain convicted that it will be worth the wait. With that, I'll pass it to Ryan, who will take you through the numbers, and then ultimately Thomas, who will give you some insights into our sales and growth. Thanks.

Thank you, Mitch. Our financials in Q1 reflect the improvements Mitch outlined we're building towards in the last earnings call. Revenues amounted to $12.61 million in the three-month period ended March 31, 2023, and $8.53 million for the three-month period ended March 31, 2022. Revenue increased approximately 48% through an increase in utilization and total volume. Plant utilization on the quarter was 39.3%. The 136% increase in manufacturing utilization to 39.3% in the three-month period ended March 31, 2023, comes from 16.6% in the comparable period in the prior year, which is a result of operational improvements and increased customer demand. Cost of sales amounted to $12 million in the three-month period ended March 31, 2023, and $8.49 million for the comparable period in the prior year. Cost of sales increased 41% due to increased throughput and in line with the overall increase in revenue. The company had a net loss of $5.52 million for the three-month period ended March 31, 2023, and $5.54 million for the comparable period in the prior year. The decrease in net loss period over period is the result of elevated gross profit from additional sales. As at March 31st, 2023, the company had a working capital deficit of $19.09 million, a cumulative deficit of $65.546 million, and cash and cash equivalents of $1.188 million. During the period ended March 31, 2023, the company incurred a net loss of $5.524 million and generated cash from operations of $458,000. Please review our filed first quarter financial statements for a complete review of all financial information. I'll now turn it over to Thomas Walker, our Chief Growth Officer, to discuss the company's additional first quarter achievements.