Earnings call transcript Q4 2023

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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. At this time, all participants are in a listen-only mode.

I would now like to turn the call over to Tyler Burns, Director, Investor Relations. the begin may you conference. Tyler,

Tyler Burns

Good Thank you thank of and joining you, us Michelle. for today. all morning

On our quarter After call, David we results XXXX. a have Canopy Growth’s the announcing year Chief today, Growth financial Officer, ended news close XX, release Klein; our Chief Financial Judy fiscal market’s Hong. fourth financial for Canopy issued and and Executive Officer, March

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

XX-Q Audited and XXXX consolidated fiscal -- June ended for consolidated reports ended XX, the originally year quarterly our audited included for ended financial on Form and XX, March XXXX, fiscal Form March XX, such XX-K consolidated originally the statements year financial quarterly financial December XXXX XX, unaudited annual XX, XXXX, statements XXXX, for the periods included our quarterly report periods. for September on on

financial release been and statements filed EDGAR available website and on and under and the on news The SEDAR. have our investor tabs are

statements our begin, on its statements entirety like remind we discussion discussions at in qualified issued and the end this include included is today. current to the news Before release assumptions, will by during note views that you would call management’s that the of based forward-looking regarding I forward-looking are the and cautionary that

differ could cause on Canopy’s materially Please to review that for with SEDAR earnings various reports the filed results factors projections. from and and release today’s actual SEC

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

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

that, over the will to I turn David. With call

David Klein

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

market; four our today, progress path plan cover and First, the the Canadian forward progress update ‘XX; the on the our the on During for USA key BioSteel cannabis business accelerate U.S. performance Review of strategy call our topics: finally, in I’ll transformation and second, of and BioSteel and entering the cannabis fiscal addressing the to ‘XX. third, business; Canopy an fiscal the

remarks, my to brief on review we Following taking Judy our results balance and She’ll share update also path will and financial strengthen our liquidity. improve quarter to provide the position of ‘XX fiscal profitability. are discuss an a sheet and fourth our actions and our

Fiscal government both as Canadian in iconic challenges industry transformative ‘XX as to quality by delays delivering strategy internally practices, sides by to and and scale. led which our demand systemic achieving evidenced we a executional with in continued we market at consumer challenging border. continued was year the cannabis now consistent delays brand. to transitioned proud faced Canopy, for we’re that I’m the genetic say commercial cultivation be And yet the marked substantive regulatory illicit battle action change. by a issues, of on The challenged Tweed

business X,XXX reducing and across building our beverages, headcount to former manufacturing post-harvest positions the cannabis approximately Mirabel Falls; and taken undertaking a with following we’ve Smiths Falls; Smiths model base actions the extracts; transformation business a cultivation our adopting in operations; national in our flexible beverage through divestiture for The full to sourcing by simplify third-party moving retail exiting and necessary complete And edibles, the initiatives: eliminated. of

the complete worked initiatives of schedule. has team these to majority fiscal year on the Our diligently ahead over of or past

transformation actions end results, through and full of SG&A but this already we’re ‘XX. COGS demonstrate expenses seeing magnitude of our fiscal effects its million to combined with the $XXX A of already time takes delivering a

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

I’ll now address the BioSteel Review.

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

us, costs from to and the review, we this the launched remedies and provide on forensic leadership With and the be swiftly internal stability counsel our resulting business, are We the of which the business exited with external effect, several members was time. Audit actions outlined Committee, of from BioSteel of act pivotal including recover and to in to this we litigation the associated to BioSteel implementing several felt the controls the oversight Review. to to strengthen the at have findings important damages we’ll results independent Based for are considering accountants. legal XX-K. an it review To available with remedial together all the BioSteel team

‘XX. national XX% Despite this, share reached the in quarter gas of of sales According fourth convenience the fiscal beverage increase prior. ‘XX, to the year from Canadian in XXX% and a the channel we BioSteel revenue have in X% which in great brand, in isotonic up Nielsen, confidence saw fiscal BioSteel’s

BioSteel’s up for the down summer. year. Cup of the data as NHL drive to Canadian delivered market which displays momentum prior include drivers ‘XX, partnership, Costco from the the Growth shows as by the U.S., with fiscal incredible channels, market mass club quarter the well the in in the in drug IRI during BioSteel visibility on BioSteel continuing fourth Stanley and accounts at XX% brand ACV prominent doubling this food, XX% playoffs. In We’re at

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bickel for of cannabis anticipate the year THC products, brand the innovation increased the ‘XX. North And speaking as position. growth vaporizers. market of and Australian of And with to in we certified market medical sales with in new of growth mark North dedicated in new American market flower & For of high Storz European and we’re the our medically sales supply strains in a U.S. our business, the focuses improving & on on coming our its Bickel, of expanding of is focused to resources along international place the distribution by expected consistency product Storz fiscal FYXX sales BioSteel, continued American growth including the

to achieve primary American adjusted These for us creation lay value position necessary priorities, for North Canopy foundation long-term Canopy leadership. will That objective. to our and addition is monitoring EBITDA the brand-driven in USA through continued positive

With that, now over to Judy. I’ll turn it

Judy Hong

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

Let’s start with the balance sheet.

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

$XXX be the the would addition, would like XXX convertible been now debentures, I’d for million In the mostly million, made XXXX due investments cash disclosure our in be to that April, With and and of XX-K. debentures has the concern XXXX February to current settled plus related convertible notes USD payments equity. million the short-term through Adjusting mind, debt the portion February in accrued address the interest. growing our $XXX and in in July ‘XX long-term Constellation

We options in we ‘XX that and will that to million and cash ensure months a of are $XXX ongoing number have that investments, our several our meet financial fund ended over executable we we covenants. have the operations short-term next capital and fiscal with sufficient believe

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

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

proceeds received of far QX million. fiscal of $XX So we during ‘XX,

options in with lenders discussions monetize debt our and assets in also various also accretive on to businesses, reduce an we’re We’re our manner. additional exploring and noncore options our to

the Canadian XXXX declined XX% year I’ll consolidated over fiscal adjusting of In now of second revenues and of the declined year we million. QX, fiscal million revenue revenue declines $XX.X full year quarter revenue of generated moderated the period. year When for divestitures Full review full $XXX impact half in and and business, the the results. financial our of and the prior ‘XX net CX restated retail year. fourth XX%

negatively were Canada inventory gross Adjusted which shifts $XX BioSteel impacted were of World in gross BioSteel. inventory Adjusted $X.X inventory our XX% and QX -- write-offs million margin, debt of margins by expense by Reported to QX. charges most gross BioSteel, FY in in margins $XX impacted bad excluding approximately QX BioSteel. of the during negative Adjusted write-offs, restructuring loss and strategic sizable was at included EBITDA relate and XX% million write-offs XXXX million of during at Rest cannabis. of of additional

investments progress relative against QX at EBITDA improved demonstrating BioSteel, adjusted increased transformation Excluding our to business FYXX, plan.

have nature businesses or a made full negative XXXX. to as of are not in at adjusted losses year BioSteel given basis, and expected fiscal significant as the we approximately our to changes EBITDA gross the On EBITDA adjusted full $XX million, million that Canada well that recur year $XXX onetime significant by in are costs margins was our in BioSteel. in loss investments driven Included

excluding and significant inclusive investments decline X% expenses, marketing full this expenses year of in amortization the acquisition and of on depreciation a costs year’s a saw at increase SG&A BioSteel. basis

BioSteel $XX expenses have would the Excluding adjusting approximately declined or year-over-year. and by as million wage last Canadian year well as benefit dispositions, the received of impact program SG&A XX% for

the to of negative XXXX, USA. related $XXX increased QX in compared in to costs was by flow and increase formation BioSteel cash million a a Canopy XX% of Free investment of outflow driven fiscal

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

improved relative when to sales normalizing X% medical and increased adult-use QX gross stable adjusted a QX. period year margins BXB X% slightly gross and but adjusted for increased ago compared margins to was impact compared Canada the to inventory our write-downs. negative to sales was cannabis’ and of XX% Importantly, cash depreciation

QX we quarters, quarter XX% segment, excluding on in cannabis’ and which cost offset year-over-year. shipments year-over-year a record in improvements impact have another the XXXX a CX our Australia, fiscal now divestiture, execute program. and down cannabis was our FY CBD the expect additional We four on of gross as was Rest for revenue in of of consecutive saw reduction margins basis. in Canada improved we ‘XX U.S. Israel by decline World business to

Within QX our improve the during remained new versus products Storz half versus last see the XX% benefiting fiscal resilient from ‘XX first full revenues half year businesses, in sales of fiscal consumer Bickel and in of We declined with QX products. by at second year’s QX did XXXX gross sales & fiscal margins XX%. ‘XX, business the this

in the continued the Works’ dynamics. This XX% year to to decreased current period due retail prior UK revenue compared challenging

seeing XX% improved are adjusted prior year the XX% this business gross and in stabilization signs to in of from margins We period.

in a correction alluded of minutes X% discussing I’d X% restated million thorough million net consolidated have David like revenue exited net resulting spend sales, that few to X months BioSteel’s After in financials already. to the performance. the now in of misstatement, net ended the or we revenue to, $XX overall majority the for revenue revenue. historical XXXX of a a approximately December March with review decrease revenue ended of year relate A international we restatements or which XXXX have fiscal consolidated $XX net for and of

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

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

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

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

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

renewed exited of already have not contracts. marketing have a We or number third-party

approach. And endorsement sampling options a we’re burn can to available focused reviewing reducing ensure to further we’re We’re ensure don’t have BioSteel. additional at that programs we minimize costly cash we our that returns. And generate to us exploring

like now operations outlook, across million have I’d rate we at run $XX revenue and fiscal XXXX per we to current In and believe quarter. our rightsized of achieve the to actions cannabis, to our achieve discuss priorities profitability to Canada adjusted positive $XX our million businesses. EBITDA

costs program cost to savings that and closed. majority be well headcount, underway driven by we’ve we’ve the Our which reduced with elimination of already expected reduction implemented of is facility

well In THC in Australia of in performance expect the and Germany, improved World Rest supply cannabis, driven of as Poland high we new growth as continued by flower.

XXXX. business the debt distributor during UK, over we do bad profitability $X of we in in expect recur million a by also the not to and fiscal We expense anticipate further streamline as model improvement shifting to

by drive market. presence returning in focus in the later on XXXX, this U.S. year launch to growth resources expected that important with new focused driven is enhanced renewed additional product to Bickel & Storz and fiscal in

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

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

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

we expect cost We our XXXX plan fiscal EBITDA initiatives. show losses also in reduction its on meaningful as and growth in reduction to BioSteel adjusted execute

mitigating announced in strengthening executing maximizing and financial key we’re interest is preservation also BioSteel, an savings and divestitures asset a debt cost priority program, from To our Liquidity reducing this against and burn focused cash ‘XX. our at end, manner. proceeds expenses position on fiscal accretive operating in

the We cash believe with our proceeds our expected balance from flexibility should to businesses provide actions, obligations. existing all with of combination of drive these forward, while meeting along debt us our facility and divestitures

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

prepared This concludes my comments.

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

Operator

question at [Operator you. from go Capital Instructions] come will Chen ahead. Your Please first BMO Markets. Thank Tamy

Tamy Chen

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

break don’t You segment. the EBITDA by out

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

For cannabis not margin Canadian complete with anything just business can look, of products what Canadian you SG&A sure least all what that now can of that wondering, hard I’m extract well, you that now is -- you P&L manufacturing segment, and have at the assess was how and maybe is your your the growth look example, So, much before. starts to challenging how I’m lot the business there us asset-light the a is kind closing transition? like it’s the more share the of -- there about infrastructure your you’ve outsourced to like, as asset-heavy facilities that

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

Judy Hong

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

you going a basis point that address to go-forward be more ways forward hopefully in at working the we’ll on clarity able are that to and on some at future. give We

really to per But few we your to operations I able think be to say to would back standpoint have $XX profitable business Number and rate. SG&A come about at what things. -- cost million a to is change done our rightsize revenue all a question quarter be run million from $XX one, of Canada, structure I

of of now think seen on be deliver revenue EBITDA really that think I we would are you’ve to to basis. now do couple the with us breakeven quarters. adjusted level, a that for we that that the rightsized positive And

that we And a closed a have just operational I facilities, We locations really our have Number like costs when we that think the number just to us just that. from are significant insurance not in have you both had one, of significant implemented out cost that non-people goods taken of an elements headcount the footprint there obviously, costs and few cost save already. -- sold. and We’ve costly of reductions standpoint. the taxes are really

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

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

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

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

Operator

from next ahead. go Please TD at Azer question Cowen. Your Vivien comes

Vivien Azer

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

two, I you in a dimensionalize of that So, BioSteel. comment And Judy, wondering, path if one, then, the realignment as maybe David, just could kind you could terms was in follow-up, to the profitability the which channels retail priority from most the moves the and with away because the like of channels it deepest of U.S. relationships. in you’re brand of reorientation familiar the seems have kind on

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

Judy Hong

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

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

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

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

David Klein

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

prominent all out base. a and positions it of can And of and was kind Canada, -- affinity more retailers consumer brand with and of gyms, soccer in takeaway. the in the so started with major consumer and building more kind its with that in the And rinks now, the on authentic in fields BioSteel shelf hockey that you see on the

size the going we we the just it’s an with really up our the U.S., to on U.S. do retrench overreach building to distribution a without where bit channels so, we it that entirety in of a product. a because those today then, build the was retailers, strategy, company deploy to and need the hydration would we’re think by if the decided think familiar little starting with. retailers little bit trying we brand those an direct And all In business and maybe the where of more to into allowing it than base to liked, across maybe same consumers end the we have connect of big ultimately, will, base for I we’re authentic a you in positioned already up the using But working the slowly U.S.

Operator

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

Aaron Grey

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

the through talk from closes. this able won’t that, you Obviously, NASDAQ. ability any guess, overall is about be can go ability business finance to you for just other Thanks. consolidating, be Canopy really to terms to want publicly USA? future listing -- do once some so that funding that. venture also, then operations, this And on U.S. have in you once I will to NASDAQ, closed. any in Just help Canopy So, USA with to plans just benefit have with just just would the the comply But funding

David Klein

Yes.

of couple a So, things.

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

day if have there inorganic structure, is on that the the fund have foreseeable fund its question aspirations to of to more cash In then, funding, that Canopy for other initiatives than with the is will to USA take the growth already we that future. And developed the using business ways sufficient structure. hand the do business terms USA Canopy really, the on want then like on we closes,

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

Judy Hong

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

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

David Klein

and continue been seen where a of and Wana we’ve as result asset-light that. always at to very grow they’ve work P&L brand a their attractive have it And

over I just of Acreage are as little capital that. U.S. would But in mindset as time, up We’re to as intensive. to think call we and a light at again, possible seeing look then Canada the asset that ends being be sort same in more we Jetty

Operator

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

John Zamparo

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

Judy Hong

for Yes, John. Thanks the question.

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

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

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

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

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

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

Operator

Your next go Michael Sandler. question Lavery comes from at Piper ahead. Please

Michael Lavery

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

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

Judy Hong

that take I’ll Sure. question.

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

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

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

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

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

we of million to cash cost savings in in cost the $XX that’s $XX in really terms program. the somewhere CapEx XXXX, million the So, cost should inclusive our be execute of think FY on to

additional options we’ve bring are that we’ve I coming then, in are that said, the will outlined think the And close I as then $XXX million the other closed And to the proceeds on that additional months already and of proceeds got expected we’ve potentially. these in table cash.

We options. various are exploring

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

Operator

at Matt Canaccord ahead. next Your comes Genuity. Bottomley Please go from question

Matt Bottomley

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

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

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

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

Judy Hong

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

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

had So, with in I think the we the in outlet markets, decided that team of the demonstrates America. of BioSteel really North strength some expand products they you an that When look would certain distribution in of that this do had management more frankly, at international sales, brand was the where inventory. say, opportunistic, to

have came think think we where seen, or really the or that’s the through. practices misstatements I misstatements financial when you sales about recognition And that issues the the --

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

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

David Klein

Yes.

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

Operator

Your Pablo & Please next ahead. question go Zuanic at from Associates. Zuanic comes

Pablo Zuanic

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

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

get Thanks. done. and really just I’m struggling to of -- the I’m after trying to So, said benefits is Canopy all USA

David Klein

Thanks, Yes. Pablo.

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

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

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

like. about business USA Now, through been looks the be will a in what its consolidating we our We what businesses to will will won’t be transaction, be but our able merged. it have that what we look Canopy talk consolidated once to those disclose position entity like, post -- as own consolidated results, our

we usually strategy do trying a it good the good believe about is we medium to term. North categories. a We is focused mentioned that strategy, a business it’s on to other other lot our provides us opposite America. the find create a is Pablo, like than So, in think you and one on then, a strategy of that how the great U.S. and thing fair be markets into Judy of -- a very better still cannabis-focused focus the And it good to business want simplify that -- expand could or right? into value again, for that’s path to very

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

Operator

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

Doug Miehm

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

David Klein

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

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

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

Operator

time. questions further no at are this There

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

David Klein

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

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

answer available be a Have will questions. Relations additional evening. good Investor to

Operator

this earlier following can gentlemen, of results issued concludes available Canopy quarter September the call. in and replay provided call will fiscal the be accessed and Ladies conference XX, financial Growth’s press A XXXX conference Company’s today. until and XXXX, this instructions fourth be release

attending for of enjoy rest your day. call, the you today’s and Thank

lines. now disconnect may your You

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