WEED.TO - Earnings call 4 2023 | Canopy Growth Corporation

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Operator

Good afternoon, ladies and gentlemen. My name is Michelle, and I will be your conference operator today. I would like to welcome everyone to Canopy Growth's Fourth Quarter and Fiscal Year 2023 Financial Results Conference Call. [Operator Instructions] I would now like to turn the call over to Tyler Burns, Director, Investor Relations. Tyler, you may begin the conference.

Tyler Burns

Michelle. you, Thank thank and you joining for Good all today. us afternoon, of closed Growth's we Officer, Officer, markets for issued our call, year financial our and March announcing Chief news Judy Canopy release a have financial fourth Financial On results Chief XX, Canopy Executive XXXX. the Growth and David Hong. After fiscal quarter today, ended Klein,

our for XX, In the fiscal for fiscal on Form XXXX XXXX, March as addition, and XX-K XX, we statements previously filed of well our comprehensive periods. audited which ended year as contains ended the the annual March financial filed report XXXX, years following restatements

news XX, Audited on consolidated financial on are under -- and consolidated XXXX, on XX, quarterly tab XX, annual SEDAR. audited for financial such September financial in March unaudited report included have the XXXX, quarterly the statements XX, for our periods. The March statements and Form June and originally XX-K year and fiscal period XXXX, Form filed XXXX, ended website included the ended been and our XX-Q fiscal consolidated originally XXXX, for and on our XX, for release financial the reports ended EDGAR year investor December quarterly available statements

SEDAR factors projections. news could earnings issued and with and to cautionary release to results by the and forward-looking this filed at Before regarding statements entirety call assumptions will from of our for discussion that current materially Please today. that management's its remind we Canopy's statements included include various is in the are would today's review actual end that begin, on discussion I like and release views forward-looking cause that qualified you differ the reports during the the note based on SEC

closest measures stated. dollars all note In provided GAAP addition, included measures information earnings our Please financial any Canadian unless reported are otherwise that in release. to their is between non-GAAP reconciliations in

question-and-answer possible, questions a to that, we over will questions will to by many Judy, themselves analysts take I ensure remarks ask and David session Following from turn as where analysts. we we David. question. With conduct to will as the call prepared that to one limit To we get

David Klein

Good Tyler. this originally like acknowledge us. of and call call the I'm afternoon. is to later today's that for you place I'd thank joining taking this afternoon, the planned flexibility all and collective Thanks, on attendees and than appreciative of patience

call today, the topics. cover During I'll key X

our First, 'XX. the progress and Canadian our fiscal of the of business transformation in plan performance cannabis

review Second, our strategy accelerate addressing to BioSteel BioSteel the and business. the

the the USA cannabis 'XX. Canopy market. an U.S. the forward And path entering on on Third, update finally, progress fiscal and for

Following 'XX X,XXX my provide update And internally sheet a and transformative in by challenging substantive market we the be of on yet the count transformation to our a quality profitability. as which we Tweed brief the the cannabis that of extracts challenged across as challenges say She'll transitioned achieving our base to at government we've systemic practices, in for beverages, taken by fiscal former industry marked business now reducing on complete necessary remarks, executional path illicit full sourcing approximately divestiture our actions Canopy, moving The Smiths results iconic quarter strengthen and taking issues, action edibles, both we continued by proud positions in improve initiatives: are genetic we're border. 'XX and cultivation financial year a regulatory through continued our and our actions our retail to and strategy and to the demand Canadian Falls, a by national battle led to adopting a Judy fourth simplify and position our and to building Mirabel of review also discuss Falls, with I'm share cannabis undertaking model an liquidity. Fiscal balance eliminated. scale. will was exiting operations, brand. And consumer and Smiths commercial with cultivation delays third-party head following delays manufacturing flexible the in for change. sides the evidenced beverage consistent The business delivering our faced to post-harvest

of has with the full delivering this worked a initiatives expenses Our magnitude of combined team demonstrate in SG&A its time complete seeing the COGS past million diligently of or fiscal transformation results, of fiscal to 'XX. we're year already majority of end takes ahead on to these our over effects actions the $XXX through already but schedule. A

$XXX Through continued by a Canada, costs total the now on commercial of of overall and performance stable in by million reduce simplification along the path to further end expect we're with profitability. I'll discipline address realizing million to to our $XXX review. 'XX. BioSteel We business, fiscal in

our disclosed we our XX-K, our preparation the BioSteel Form unit. XXXX our certain spring, we in As statements for earlier during for booking of the this business of financial trends sales identified

launched Audit external accountants. we with internal oversight an from forensic the Committee, independent together and With the counsel review

including delivered findings fourth the and year associated and considering saw costs team revenue and a available of to in time. Based the on BioSteel BioSteel of of to as to felt exited fiscal in drive BioSteel recover on the controls We XX% Stanley several at confidence the isotonic actions partnership, business review, resulting important to and as of was According provide X% XXX% it displays business, Canadian XX-K. from share mass quarter this the strengthen the have XX% in all swiftly several by we We shows incredible us, of reached implementing Canadian in this, doubling ACV up remedies we with fiscal in Growth beverage in the our the BioSteel down which summer. to are to review. Despite the be in increase drug to members 'XX. prominent gas damages include which act remedial drivers the the national the channel Costco and of this results the from visibility have this BioSteel's at the litigation the great brand. BioSteel in quarter data To stability momentum for from at we'll outlined IRI channels, the effect, are during legal prior. with leadership the pivotal in convenience to 'XX, for Cup continuing fiscal brand the U.S., accounts up prior year. BioSteel sales We're playoffs. market fourth club food, 'XX, In the well market the XX% NHL Nielsen, BioSteel's

a will the to we tightening specialty channel ahead to to and her U.S. in focus inspired retail emphasis the gyms look strategy sustain the to also prioritize we sharper brand on geographical loyalty we'll regional athletically the markets be address place on profitability, the growth, As build BioSteel's to At such with remarks. consumers. which in as Judy same our must further speak time, drag key

for our cannabis all to continue options BioSteel. on core focus we'll evaluate business, we As

the in the behind the ahead. groundswell With growth of North momentum to anticipate profitability we America, in brand line strong years leading top

to and given quarter fiscal quarter. 'XX. change as our internal managed the compared the market team that quarter of We slightly the spend minutes fiscal scale 'XX. Canadian few of a fourth I'd positive to BXB Canadian 'XX discussing third higher adult-use in challenging fiscal our a of this performance during the dynamics Overall, the sequentially in ended the cannabis revenue cannabis view of Next, like our business in the

achievements performance Canadian fueling adult-use quality, fourth consumer #X in brand flower comeback the categories, strong iconic and 'XX rise year from improvement this been to of the resurgence #XX driver in a market. One market in of of in Canadian adult-use the dominate flower the was marked which the this the the has to most strong important prerolled propelling in Tweed's of driving continue primary spot quarter the fiscal the Tweed The demand, prior. up brand

house we As year of the unify significant announced Wana to in late our forward excited marketing all branded we sales taken May, North ahead, that we're distribution, brands. Canopy to Canada. controls In step to products of look now have and another American

for planned Wana, brand like X in an top is in pineapple to are has Canada and deliver CBG team strategy team Wana ambitious held represent gummies. the industry-leading passionfruit for growth sales with eager Our which past the the We've to working years. the spot Canada edibles innovation

With the our as adjusted to Canada's incremental company. we Wana, cement EBITDA Canopy leading we edibles gains as expect addition of

speak quarter, the current to USA, we revised which SEC to the Canopy our market advance progress firmly the our is like rapidly to I structure Canopy compliance interest To revisions briefly statement rules. I'd to our Now in on best order filed in which in this listing strategy, through cannabis NASDAQ U.S. approach entry with market. ensure growing outlines with proxy continued the USA the the exposure a believe to of into U.S. gain to

required shares. exchangeable Acreage, shareholders meeting, new shares conversion the a Upon definitive file for approval to of Constellation and expected Following plan the to will nonvoting be will regulatory its acquire the approve asked special class from Jetty. to Wana to statement we is subsequently Canopy which exchangeable, of exercise USA common way a of the a pave receiving to and right review, proxy shareholder that during creation

routes continue USA to primary of by entire U.S. brand us Our market. Overall, U.S. the Canopy Canopy their and our evolution we portfolios, leveraging objective for for continued ecosystem believe the to positions optimize USA to value is favorably market platform of operations. the the

for to like priorities I'd Finally, outline our 'XX. business fiscal

business units. revenue sustained growth EBITDA and deliver key to designed are priorities all adjusted for Our

Canadian processes positioning Tweed the apply by brand quality this strengthen our deliver driven joints. means have flower a line. that and enhanced to XACRES. We'll being stable to that gains see cannabis improved to Doja across prudently brand, continued cultivation including business, the our top expenses For flower prerolled and competitive of managing across same We Tweed the growing the

we of expect on by cannabis Canopy our On registrations. driving continue Canadian medical momentum insured the focusing patient our business, will side that

distribution addition Canopy is to USA year of growth our I'll These and we're resources coming products, strains stores continued with Australian on international of brand-driven priorities, that, positive as Bickel, along leadership. foundation in sales BioSteel, is our for supply monitoring mark long-term and on of Canopy medical high with it of flower creation primary Bickel turn business, certified lay American by continued to position. over 'XX a THC U.S. North our will through to our in Judy. the market adjusted anticipate sales in in the in sales place position including market growth new American of the of brand For FY in the European consistency speaking product market necessary us the North its EBITDA value expanding now cannabis and North to focused American of expected the increased And vaporizers. the for That the growth 'XX. And achieve in we innovation new stores objective. With focuses medically dedicated for fiscal to improving

Judy Hong

much, start good related I'll very and balance I'll XXXX sheet. recap around XXXX briefly I'll priorities then and you evening, fourth David, discussing Thank then additional BioSteel, outlook. year results, our review and everyone. including our restatements our quarter fiscal by full to details

Let's start with sheet. balance the

$XXX we which actions in to $XXX related XXXX investments, paid of of As debt into unsecured refinanced our XXXX, term agreement. had of by our X% strengthen of debt. second million X.XX% taken $XXX to balance XXXX, July sheet. cash part long-term which million March at Also of XXXX paydown we subsidiary we In down current to was million and the we've XX, notes XXXX, April USD a a a of of portion October shares. March number Constellation, held to and the total million we negotiate of XX.XX billion, converting discount loan Subsequent the intend the as as April, XX, additional short-term $X.X in classified of

XXXX and I'd number Constellation options been mostly concern short-term capital $XXX fund investments, USD investments be a debt that have months be covenants. convertible and [ meet debentures, executable In our debentures our million in the Adjusting disclosure ] of financial $XXX believe ended like will over and our that the 'XX has equity. with million made notes that addition, sufficient we and in fiscal the operations and address we February for several million settled have now short-term growing XXXX our 'XX the of July ongoing April, to cash that cash the payments $XXX current in the are portion February million mind, and the will ensure XX-K. We next With related XXX due plus long-term in interest. through the to convertible accrued we would to in

of total the For one, operating taken end business that fiscal by include expenses already reduce at to the further reduce to BioSteel initiatives are we've XXXX transformation burn. million $XXX announced 'XX, which million is in reduction to cash overall expected during $XXX million during cash burn $XXX fiscal operating businesses. realized meaningful the to inclusive by reduce our of program the FY actions expected underway the These XXXX. Cost

our are expected to other also $XXX facility have of we're on of include the already working proceeds agreements have Additionally, which several additional options signed that and dispositions, closed liquidity. to XXXX. to in improve million generate September up by been These end

'XX, restated retail exploring BioSteel, revenue for Full noncore $XX.X $X.X and rest-of-world CX options inventory most Canadian In of various year fourth generated margins, assets million adjusting million. fiscal Adjusted full business, BioSteel accretive BioSteel. of by and the negative and debt write-offs, relate expense in financial impact review restructuring additional EBITDA FY inventory our lenders in the in quarter we QX, which bad and was margins now during XX% an prior our and divestitures revenue in negatively revenue QX over margins discussions received also in manner. I'll $XXX million of of cannabis. moderated year monetize of of XX% revenues debt the XXXX at to $XX We're of million. write-offs fiscal our Adjusted QX. the during second of 'XX and $XX excluding gross loss our were also additional strategic far shift charges year. Reported write-offs gross declined the year results. in QX and of When impacted So fiscal approximately by included reduce and the inventory $XX during net million on declines to businesses, full year we're we XXXX were declined impacted and half sizable gross Adjusted with options Canada BioSteel. at million to QX period. of consolidated proceeds of of our XX% XX%

a adjusted Excluding BioSteel our Included in negative losses was against by adjusted our investments business increased adjusted BioSteel. as driven the basis, BioSteel, plan. On at significant demonstrating at $XX and in relative Canada progress loss are to margins investments EBITDA full QX EBITDA transformation well million, improved EBITDA FY 'XX, approximately year full gross year not and X% $XXX of million full acquisition a significant our expected costs given made of are onetime inclusive expenses that have in increase year's expenses, in saw marketing BioSteel. significant excluding or basis costs recur in this and the to XXXX. SG&A to we that businesses nature year depreciation amortization changes investments a the of decline at fiscal on as

last Excluding for to BioSteel of XX% of the the program benefit as year have QX flow well impact approximately related year-over-year. Free of adjusting a SG&A million increased was BioSteel in received negative costs and fiscal $XXX increase driven cash or dispositions, XXXX a by million XX% as compared $XX and to investment of declined would in Canadian wage outflow USA. the by Canopy formation expenses

QX. during for of 'XX. Now fiscal the business we business our X%, divested retail cannabis look QX from at a of results the let's Canada declined area excluding each take revenues

U.S. increased Importantly, compared record relative and quarters, slightly medical X% improvements margins our we segment, on XX% fiscal sales normalizing another the year-over-year revenue period the Cannabis Australia, in margins program. shipments depreciation new versus the was was gross year cannabis' We the revenue during sales XX% X improve as XX% reduction to in improved fiscal QX. divestiture, cannabis' XXXX X% U.K. & first margins QX in by and impact of we 'XX impact execute excluding FY full but last by year-over-year. Canada challenging this to write-downs. Canada of sales margins the half cash 'XX, business and on when which expect in gross sales to Bickel fiscal and business dynamics. now half for resilient quarter products. fiscal to see CX the Storz to retail down XX% to consecutive remained have was a businesses, compared Works Rest-of-world our QX our decline of of CBD in improved inventory at additional products in Israel offset in year from a adult-use basis. Within year's continued gross versus due of saw did current our QX cost prior We period was adjusted and decreased compared QX gross year ago 'XX consumer to adjusted BXB stable QX second with benefiting XX%. This the a negative XXXX declined revenues for and increased

to improved million like We revenue net seeing of review that fiscal resulting few in BioSteel's year the of XXXX adjusted thorough spend decrease XX% for to, After we $XX of David are have consolidated the majority the sales, have March XXXX restatements XX% with in months in performance. statement, a margins revenue. in the or A of signs from this consolidated of and we a period. I'd net net for ended a correction overall approximately minutes revenue now exited in financials stabilization X% international already. revenue $XX year discussing business million the restated historical of alluded ended gross prior December revenue which to net X or and relate to X%

EBITDA months fiscal fiscal for XXXX. a XXXX similar XX-K. X restated Our amount in and also for QX through included been of for as are QX and The consolidated as 'XX adjusted by well 'XX fiscal restated quarterly fiscal has financials financials our

international BioSteel lower gross full of strategy. significantly during our and businesses sales revenue generated year our fiscal as fiscal by XXXX, QX were of U.S. $XX.X exit net fiscal 'XX impacted well and XXXX forecasted million decision of margins than revenue commercial QX $XX.X During to million. refine as

marketing drag a is to to sales part cost overall increases reduction addressing profitability, endorsements, sampling and of marketing cost its With and our BioSteel at an that is in initiatives BioSteel important faced plan. in fiscal restructuring costs company-wide incremental actions significant programs. We've initiated undertaken XXXX. overall being trade already profitability additional our Canopy's related also We structure to

to are First, certain improvement shipping fixed warehouse programs obligations unprofitable eliminate we reduction our customer initiatives the fiscal These storage of new to that to and significant costs business margin a favorable across businesses gross and our and in transitioning including ready-to-drink gross that to costs, will firm model a lower the and new and underway, put beverage XXXX gross exiting products. of and in number improvement promotions, on to have expected reduce inventory contracts a comparable margins over well more costs with cost significant product are year-over-year depth initiatives powder margins achieve generate time. in other reducing path frequency premium

Second, investments fiscal following underway sales marketing in XXXX, well stepped-up is during rightsize and spend. significantly work our marketing to

already and now of available quarter. profitability a number our we're And achieve returns. can $XX operations or have we and burn costly third-party current at minimize contracts. achieve marketing per further revenue our we not reviewing across the have approach, ensure actions and EBITDA we're believe a rightsized our endorsement we renewed additional $XX we fiscal generate We to million exploring adjusted to to to rate Canada that priorities our million to cash of outlook have ensure BioSteel. I'd don't run to positive like discuss XXXX at that businesses. programs cannabis, In sampling us have focused reducing exited to We're options

with count, as driven head program be and costs flower. improved of we've is Germany, underway we've and THC in continued we reduction Poland elimination expected majority closed. In growth of which well performance reduced implemented savings by supply cannabis, expect driven already of as cost facility by high the Australia Our that in rest-of-world well new to

by renewed market. with profitability Bickel focused as debt fiscal later U.S. during we We distributor $X further to we new to also to over is to expected shifting a model in U.K. bad fiscal driven and anticipate by business on resources drive the this expect in launch do & expense of important returning in streamline additional not growth the focus the that year enhanced presence million XXXX and in in product improvement XXXX. Storz recur

fiscal We XXXX. & expect to margins Bickel maintain Storz in healthy

Works the BioSteel, gross its its top margins profitability spend. strategy expected on marketing focus fiscal building to is while is strong 'XX further refining stabilize in For its in Canada, 'XX. This fiscal and improving U.S. in while improving momentum line rightsizing

to our of we fiscal expect adjusted we together, all exit across approach as for XXXX. taken So businesses, positive EBITDA except BioSteel

and We on our adjusted debt reduction EBITDA in divestitures, also divestitures cash proceeds reduction operating against asset these position BioSteel, we flexibility savings manner. We and expect financial forward, at existing from growth fiscal key from we're plan in preservation losses cash burn cost as also to while all is To obligations. reducing executing our cost with priority execute this end, actions, expenses the XXXX balance meaningful our meeting in and an combination 'XX. interest our to facility accretive us provide and along program, show fiscal strengthening in BioSteel on maximizing our mitigating in a should its our debt proceeds focused initiatives. drive believe and of expected our with Liquidity businesses of

core believe my with we now in prepared conclusion, profitability strengthening Canada on reduce balance cannabis burn achieve elements company significant comments. place towards while in continued and transformation have total our driving cash significantly concludes our business. This we and the focus for underway, work In sheet our to we

will now the questions I to are We happy now Operator, take and from take questions. analysts. David

Operator

first question Your from Capital Tamy BMO at will Instructions] Chen [Operator come Markets.

Tamy Chen

to 'XX. go target EBITDA to wanted of I for fiscal end your by the

You out the break segment. by EBITDA don't

your to the assess set hard today. to bit path a it's out you've achieve targets here So

P&L share anything about I'm can business transition. is least there Canadian now the us complete look to segment, So that maybe how wondering, at cannabis your you're the with starts just asset-light more you

can the have what lot sure of that closing products look now For you've margin well. growth a as facilities and extract like manufacturing example, your you challenging outsourced like not I'm the

asset-heavy that infrastructure was hard before. your is, how much to assess is what kind of of the and Canadian I that all think, there it's the SG&A business

starts about to share helpful. going would business look be that So how P&L the forward of additional you anything can

Judy Hong

our a the to it's I'll I start clear with agree, parts look moving just comment segment profitability. P&L, able being happening provide clearly to that understand just at Thanks, you all not difficult us Sure. really details when the what's very around with Tamy, and

a We at able address some the are in I future. But give hopefully and that say things. cost be back $XX more what going a structure to clarity from have be a that few basis come quarter operations to million at all per we to point SG&A run change really to one, question $XX on standpoint Number rate. rightsize and our ways working -- profitable to about forward done Canada, would of think is business revenue to on at go-forward be able to million your you I

locations had of us of standpoint. out just just of really We we seen one, have taxes couple when now taken head be level, already. you've on an -- both think EBITDA significant have think we save Number elements significant just the a adjusted have reductions really like obviously, count that quarters. closed us we deliver goods we a that the with nonpeople costs to rightsized the are of that of that. a and would cost really insurance number are facilities, think that operational our We've costs not in costly the sold. that that and do you from cost that implemented now footprint breakeven And revenue to to few are positive I for I basis. And there

that P&L. to number start our closures through to those So flow are through, going we've made a already of

exiting a actually bit terms earlier little tracking think, Falls. expected I in are, Smiths cultivation We of than in

also cannabis by that cost once end see flow the of So this standpoint. quarter, additional from we savings happens, a should through

even high to on of million our side that's marketing the revenue a basis. with the $XX to sales So from talked that an we've we at quarterly $XX are, working think G&A then number and and to and margin the ensure on closer in And profitable made that again, cash in a million on a to about view, that the we've side, gross changes going always standpoint, really past. I drive XX% SG&A

Operator

question next Vivien Your at from TD Cowen. comes Azer

Vivien Azer

top sponsorship in to narrow with a with realignment, the you're absorb line, certainly, I continue the some a it of on agreements losses revisiting there's least wanted continued sampling, but grow you on little question that sounds to up that the those certainly, marketing magnitude follow Recognizing that of the some BioSteel. at focus looking of 'XX nonproductive like as losses. appetite to bit, FY to

I path kind dimensionalize to was in if BioSteel. that one, Judy, wondering, you So could of profitability

And as the brand away could comment Maybe and of you're realignment with like have the then, of it reorientation the you two, of channels a terms follow-up, the the because in retail David. most U.S. priority deepest familiar on the the in seems just moves from kind channels relationships. which

FY that create wondering impede whether dislocation line BioSteel. in So for 'XX planned just top the that some some the that can might on of profit improvements you have guys

Judy Hong

Vivien, the So start, question. thanks I'll for

accepting as we our at BioSteel BioSteel in the to not overall focused that overall cash burn of We operating that level. are to very significantly well are that are seeing impacting cash drag the on cash burn we is currently at a that minimize clear, exploring reducing our be we other today. losses to as the options Canopy level is business understand profitability. And So sizable

of will 'XX. think, we that inventory just in I levels of, have change profitability, we level as costs that the We the 'XX terms In BioSteel to I allow inventory think, not own it been to the manufacturing our items expected in discrete more facility given FY reducing than, write-downs the now fiscal year-over-year in as years. And and the manufacturing well we also did in as in not saw FY drag are contract 'XX, inventory that us there in 'XX see normal certain sizable rightsizing to think Verona. relates occur profitability current a of write-downs inventory have FY that few did the

way doing that earlier, I that disciplined. think because and support profitability a think this in that go we in right and our said that, well. the really a to we cash improvement have rightsize business -- to generate we sure of have a rest is the got that the adjusted addition, in addition number the initiatives significant a that to And from relates it is long businesses. path overall overall to way the spend and In profitable really there's marketing we've cost a I our will being announced also of reduction Canada structure more making as brand just I really our can for focused business make to burn getting EBITDA transformation and brand company It's the as sure to a and standpoint

David Klein

And the strategy, look the in be think that to the the Vivien, you unfortunate because playbook accepted fact we shelf by issues consumers by up Yes. related playbook year-over-year. think, being evidenced in the outlined to at overshadowing first the though, taken to use XXX% right of We really that all, ultimately are channel that as is of terms BioSteel, brand it's in the when I and continues brand off U.S. Canada the

we're in because going liked, And base the a with fields a We're now consumers it's channels distribution think strategy, positions by of direct kind rinks prominent think we an in we authentic and you on and all across an the using starting retailers. same on already to the build for than And deploy you the bit a ultimately, on the today those connect really major started building the in more to into end in with building And consumer and we that and without affinity consumer it that shelf the maybe do size. entirety of allowing its to to gyms, have we soccer working brand will, our U.S., I up -- those slowly would of was and more product. then takeaway. In base. the maybe authentic trying Canada, the the with need the a the in hydration it But base all more retailers if with. positioned of company so see brand of BioSteel little that hockey it out of up big can the kind with was U.S. familiar retailers overreach

the retrench bit little to decided U.S. the a just we've business in so And

Operator

next Partners. Your Global at from question Grey comes Aaron Alliance

Aaron Grey

disclosed want the to on touch So of it. Canopy I structure updated has USA just

just really that funding, the operations Obviously, to some through able this USA. once you just to NASDAQ. on finance to be just the benefit venture any will would so So other from consolidating, can about have go we talk ability to have comply But be ability the listing closes. with Canopy do want to won't future U.S. you with public NASDAQ

plans Just USA then that business any also, I overall help is for just in closed. that. guess, Canopy And this once in funding terms

David Klein

Yes.

a of So things. couple

proxy. reiterate to want already to our definitive just operations place I that brands, So elevate file businesses the is taking lot market, individual that is things together even a work wait trying individual to first routes are while of to that do their right? The to approval and we

In fund funding the the for business business terms that aspirations foreseeable to hand growth than of on more day on closes, will its sufficient have the cash future. the

we do want that Canopy to already other, is We structure. question using the then if inorganic on ways initiatives then USA like, Canopy with developed really, fund to the that take And have USA structure? is the there

under where not structure do gate, have will -- again, of would would ability what that's we expect I day the as and funded right the X. it be exists the I well the we to out that on business So go but

Judy Hong

of brand-led in the really and U.S. just And I minimize having a asset-light out the build to really would the model does requirements business scale. capital just benefit the add on,

for in at presence we're it's to minimal ensuring strong well, build strategy and of scale. this people really requirements to the is similar as Canada sort reasons important So there out capital about a understand deploying we it's strategy that Canada, think took why obviously I in

David Klein

just Wana a it they've over been sort grow then being asset-light to intensive. always we've of a ends Canada the continue again, attractive as at seeing where and as a of up capital little that. have their would and I same We're But to [indiscernible]. Jetty brand we U.S. as and And we are at very light in that Acreage work mindset as asset more seen P&L result possible think, look time, in be

Operator

comes Your at from CIBC Markets. question Zamparo next Capital John

John Zamparo

want considering to I to to the your your generally, you on outcome be would positive given wonder gap to that, you're in any magnitude willingness of selling space, Canada the on equity the assuming and Canopy what's get balance language issuing solvency how more secondly, And USA future? the of the the then wanted I about issue sheet able you given business just And equity, the to the concern you're go the more plans you'd what EBITDA. just do And of if of get it? then on going outright. state the and wonder I and generally. state touch units

Judy Hong

Yes, question. John. Thanks for the

sheet, on $XXX point the starting with balance -- year do we I a cash that have position. on still We is quarter ended million. So -- think the strong the the our

all dispositions expect we As bring by operating proceeds of a closed as significant of savings we cost earlier, And either will reduction had that in or fiscal up have working our on million facility, in additional currently the 'XX to I the September in we XXXX. expenses said program. on in $XXX execute

at allow actions those sheet including noncore options continue are available for of looking sufficient maintain to requirements all there are that assets balance us, actually and have of think flexibility the we additional to funding think us to So to our are businesses. But and our that we in businesses. the all a

businesses. and core we we're for as really divested historically, focused were our cannabis these noncore assets to options to that look continuing some and we're I ourselves to of that we've think think position a and a simplify I explore of And to had businesses number as generate divest company. not opportunities some businesses trying cash we've

cash be flow, clear, would make that our We that recognize we facility cost over go our manner. accretive to expected. to reduction the that help And given we recognize want that, the an our paying be loan. also the time think I we debt term -- towards just interest also from will proceeds off sure that in divestitures also won't of reduce some

our with reducing So and lower debt reducing also us help our -- that would also interest expenses over time.

Operator

comes Lavery Michael from next Your Sandler. at Piper question

Michael Lavery

the hit I like You what with year, cash you're flow elaborate little positive you some a now end look it could that of your trying the facility And have make bit was or you by the if divestitures what on a are if that basis? just the assumptions? does breakeven plan on, to mentioned as or of EBITDA wondering your you sales.

Some just what that just liquidity in of that's And a that picture in a and the management your how valuing give terms year hand, is how you're important a the of bit of it of you certainty little coming through? how but paint sense about thinking and us unfolds can is you're for those of how way.

Judy Hong

Sure. I'll question. that take

reducing achieving of to So obviously, to our the point. your is point, the improve our plan kind and our -- EBITDA adjusted cost starting

working reduce actions the interest implemented and already board. see across our We some have and obviously interest are lower rate environment million rising consideration the in year-over-year seeing reducing already we've debt even we $XX-plus a that taking our addition, and even of should on expenses In to basis, of the costs. outlined save on into that expenses we're

and standpoint there to a footprint, well. they're BioSteel that improvement managing see to our we on working as significant given and reduced that across frankly, obviously an manner the how Canada initiative make rightsized inventory have we're from also sure expect in working We capital an just inventory

to operating on So reduction to in significantly cash operating reducing a get outflow. we us initiatives cash allow would to to XX% flow I think our expect all those our a should basis. year-over-year see close

is requirement executing on CapEx savings. our about just really cost Our

months the we cost in should the $XX of terms then, as to I that proceeds options that really on potentially. in said, program. And And think got cash. expected million additional cost that's we've that inclusive on So execute to somewhere will these closed the close then think cost I be million bring table XXXX, the $XXX million to CapEx other in of and outlined the savings proceeds are FY the we've of our are already in cash $XX we've additional in coming the

various are exploring options. We

So but that consider. liquidity have available all, to more we us more we'll are details we think, those will color, options provide as as I really

Operator

next comes question from Bottomley Canaccord Your Genuity. Matt at

Matt Bottomley

trends BioSteel. go of to in to lot stations, to of some that's convenience the I the share with the is. given the commentary just positive just gas And respect the your wanted back uptake it's been given of kind whether products, market with stores, where of a

looks before reduced. sort about that's restatement. of against revenues financial paired XX% of but It a some restatement the basis like, magnitude the on Just statement of -- of overall gross the were

potentially. in items So I would there imagine there's some big ticket

or to you issues more products what of those the wondering a So were I'm if do give reported it sell on, the anything lot restatements I with with a in the couldn't the nature and has if just shelf given that something on could of little what It's like granularity that anything today. that. ultimately or magnitude was get questions the channel of life just

Judy Hong

in from But majority -- start sales. in I'll can color. came comments, really -- of I said Sure. the international and David the so add more restatements prepared what my

those and at are that and sales when U.S., distributors right? in Canada, the have are to They're retailers real, are I market really being -- that those the mean we about, sold gone are of all speak all So the through information consumer. consumer share look you takeaway numbers.

the certain they markets, or about think came the -- that practices of of brand was in that when at where issues the more or the that, misstatements that expand this financial strength in When say, we sales international with North distribution team you America. have management really sales, I think So where the seen, you frankly, to in had an we outlet recognition would the I look think really BioSteel some opportunistic, do the has the of demonstrates that's decided products inventory. And misstatements through.

it's seeing these been at events occurred, unfortunate have your in is has that it share that people we're we're improvement from momentum, that, think what think the that very distinct metric do that's brand. seeing point some market the really of positive to in We still I the the business. about unfortunate just of all we a marketplace, that the So bit the that masked engaging that looking a health be but should of by believe part

trajectory We continue business. to be the of confident that about

David Klein

Yes.

do to remarks, nothing the have we part, team, Judy. had say had returned practices restatements, called everything I product do for BioSteel was anything rectified. most the as or been sales because the bad that. that with captures within that like It in think with is it to I it, our which out was would What

Operator

question Your Pablo comes Zuanic from Associates. next Zuanic at

Pablo Zuanic

benefits I to maybe the remind -- play benefits here, the Canopy USA USA. ask devil's say of reason I that supposed And transaction, wanted lost benefits terms don't have question you consolidate them from them, giving would that know investors of -- in to us are because David, opinion, cannot about Acreage were disclose as The simple of been want in I my in Wana future. talk company. for now you these And Canopy some advocate, the done right, assets the I U.S. credit to this and could right? be could the if you for the without alignment you're Jetty, of between We to how going right?

the to been control argument, Acreage, be and and wrong, gone. been CEO right. main Maybe the ball hand, the Redecan, case of right, On if I'm has I could correct I Europe, it's are you've the disruptive, mean your in somewhat this may distraction, dropped right? other a the CFO me Canada in competitor In of

So Canopy trying really the to I'm after get I'm and to -- U.S.A. of struggling all is benefits said just done.

David Klein

Pablo. Thanks, Yes.

that believe which in a that in, are that in call that already you its approach work do and want we a rate. pool we is think be run together can brand-led of we of strong the a We and profit the business actually the one so is market to believe have out. rightsized that to We why we couple make. So Wana that market a we want current would as U.S. that is we win points kind market. Jetty, I that Canada, Acreage where to is profitable U.S. beginning the approach our at attack,

certainly put do to but easier when it makes business that structure it the by that, need necessarily didn't they itself. So together all is

are merged a public from There standpoint, are important. extracted from So are standpoint an think that be operating company to businesses those we together. significant synergies

Canopy but will its to Now what other we fair be of usually USA U.S. like. and transaction as other opposite trying find strategy results, expand that like believe that want a focus we look still strategy, business about into own categories. to than right? that talk Pablo, to our So better it mentioned into once the good businesses on consolidating is the about or looks on markets what how is simplify Judy path our thing won't to to we disclose business think medium good a through is North that be us business like great what will a very consolidated again, focused create term. position for very it and cannabis-focused -- of able America. our the that's value in be we our We be a We a to will provides -- you the -- lot a have one the could good consolidated it's those been a merged. And then post do -- entity in strategy

position And And we think still for that's that so the that approach we've taken. believe I we us. right the the that's it's -- guess,

Operator

comes from Miehm Capital question RBC at next Your Markets. Doug

Douglas Miehm

into we that you material balances and that don't the the place to you really might relates now. My don't seeing question the to balances and that really has to sharp to have And other any do changes that David, ensure unforeseen about potholes as doing to have given company functions oversight issues? checks right in or with maybe what it implement into place we're those you're could in checks bumping talk objects. types ensure of run

David Klein

included elsewhere. Yes, for so Committee, that which have BioSteel former our public BioSteel. accountants, company of And proved with that issues to the remediation replicated a very of is our Again, and complete fund, really the outside question, what -- -- that called own in that includes good we involved dedication forensic elsewhere X a happening our finance being experts, Audit additional testing we're around experienced testing we issues K rest say this was the the that's We the team, sure out is that weren't business legal make which CFOs. I a Doug. did it do was would wasn't it process

the a we the restatement. of for last work call of I ton maybe a finance team did the that clearly required remediation bottom as would we our completely ago, years generally say that robust a we've we we that with strong fact, in in that I difficult have basis our that have. we environment. say a our think do. that biweekly that's that, the asked few plans to I Committee talented control got ensuring to said a issues So of out built And functioning then progress in the those make the is plans, K, which check-ins has would and Canopy on on And what spot Audit committed toward remediation we the the sure take to business years, that I to over complexity beyond several was will,

a had have I caused items former company area that we've that issue of remediate that -- -- and forward. that As environment we any to restatement restatement. public expect of kind a that I control -- going had in to I'm us to said, CFO, embarrassed we we that our taken the actions do the do as a And not

Operator

There time. at no questions are further this

Klein to Mr. turn the remarks. back conference for I So any final will

David Klein

Yes. and Thank you, us all for joining thanks today.

Canada coming BioSteel and our believe we in reducing progressing evening. we North growth be strategy the America focused fiscal 'XX. in a Investor regulatory opportunity call. key will business strengthening to has expect and to both the the fiscal brand in Canopy completed a ahead, fiscal We've fiscal of Have cannabis Canopy substantial We've our forward. we've our and to months. And answer entered strategy Canadian And to to significant 'XX the Relations and So vote takeaways the moving concluding transforming today's to in value review our the review optimize the finally, United from burn. on made business good of States. questions. 'XX, available we continue the highlight in look while forward USA additional ecosystem, progress drive introduced entire during U.S. successfully 'XX the shareholder And cash to

Operator

Fourth XX, Results the press until call rest Financial enjoy your can attending be company's will replay XXXX Conference Quarter available the today's you today. Thank Fiscal of and instructions Growth's issued Canopy concludes this earlier gentlemen, September Call. in of this and and day. for be release XXXX, conference A following accessed and call, Ladies the provided

now disconnect your may You lines.

Canopy Growth (CGC) 22 Jun 232023 Q4 Earnings call transcript