Q4 2024 Canopy Growth Corp Earnings Call

<unk> fourth quarter and fiscal year 'twenty for financial results.

David Eric Klein: During the call, I'll share key highlights and achievements from the past fiscal year, demonstrating how Canopy is a stronger, fully cannabis-focused business that is poised for profitable growth in the year ahead across all of the most exciting global cannabis markets. First, I want to touch on the transformative year that Fiscal 24 was for Canopy. During the year, we took decisive actions to streamline our business by implementing an asset light model.

During the call I will share key highlights and achievements from the past fiscal year, demonstrating how canopy is a stronger fully candidates focused business that is poised for profitable growth in the year ahead across all of the most exciting global cannabis markets.

First let's touch on the transformative year that fiscal 'twenty four was for canopy.

During the year, we took decisive actions to streamline our business by implementing an asset light model.

David Eric Klein: This has enabled us to focus on our core strengths while leveraging third parties to add scale and capacity when and where we need it, without the requirement to maintain extensive infrastructure or invest ahead of growth. This has improved our margins and accelerated our time to market as we focus on growth across all of our priority categories. In parallel, we took bold action to drive greater focus and reduce our cash burn by divesting Canopy's non-cannabis businesses as we go all in on what we believe is one of the most exciting consumer trends of our lifetime.

This has enabled us to focus on our core strengths, while leveraging third parties to add scale and capacity when and where we need it without the requirement to maintain extensive infrastructure or invest ahead of growth.

This has improved our margins and accelerated our time to market as we focus on growth across all of our priority categories.

In parallel we took bold action to drive greater focus and reduce our cash burn by divesting canopies non candidates businesses as we go all in on what we believe is one of the most exciting consumer trends of our lifetime.

David Eric Klein: These changes weren't easy, and I'm very proud of the work that the entire Canopy team undertook to execute the strategic evolution and ensure its success, all while enhancing our commercial execution, strengthening our financial position, and establishing a platform for Canopy's future growth. As a result, Canopy is entering fiscal 25 with a strong foundation. We have a focused business. We're well-positioned in the geographies and categories of greatest potential. And we've built a business that can deliver profitable growth. Looking to our performance in fiscal 24, I'm pleased to report that our results for the year already demonstrate the positive impact of the changes we've implemented.

These changes were Dizzy and I'm very proud of the work that the entire canopy team undertook to execute the strategic evolution and to ensure its success.

All while enhancing our commercial execution strengthening our financial position and establishing a platform for <unk> future growth.

As a result cannot be as entering fiscal 'twenty five with a strong foundation, we have a focused business, we're well positioned in the geographies and categories of greatest potential.

And we've built a business that can deliver profitable growth.

Looking to our performance in fiscal 'twenty four I am pleased to report that our results in the year already demonstrate the positive impact of the changes we've implemented.

David Eric Klein: Canopy now has an attractive gross margin profile across all of our businesses, a lean and agile organization that can support growth without a step change in cost, a strengthened balance sheet that has ample runway to support our business while investing for growth, and Financial Performance that is nearing Consolidated Adjusted EBITDA profitability. Focusing on flour is the central pillar of our business.

Canopy now has an attractive gross margin profile across all of our businesses.

A lean and agile organization that can support growth without a step change in costs of.

Our strengthened balance sheet that has ample runway to support our business while investing for growth.

And financial performance that is nearing consolidated adjusted EBITDA profitability.

Focusing on flower as the central pillar of our business the consistent production of high quality flower from our Kincardine in doses sites has strengthened our competitive positioning in the Canadian adult use market highlighted by the national resurgence of tweet.

David Eric Klein: The consistent production of high quality flour from our Kincardine and DOCHA sites has strengthened our competitive positioning in the Canadian adult use market, highlighted by the national resurgence of TWEED. Additionally, we added over 2,300 points of distribution across Canada during the fourth quarter, including over 900 points for Tweed Flower and 650 points for our Deep Space beverage, ensuring increased access to consumers as we enter the important summer selling season, in our Canadian medical business and expanded product assortment in the Spectrum Therapeutics online store, as well as industry-leading care for our insured patients, has delivered a 16% increase in revenue year-over-year, marking the fifth consecutive quarter of revenue growth.

Additionally, we added over 2300 points of distribution across Canada during the fourth quarter, including over 900 points for Tweed flower and 650 points for our deep space beverages.

Ensuring increased access to consumers as we enter the important summer selling season.

And our Canadian medical business and expanded product assortment in the spectrum therapeutics online store as well as industry, leading care for our insured patients has delivered a 16% increase in revenue year over year.

Marking the fifth consecutive quarter of revenue growth.

David Eric Klein: Our international markets cannabis business also continues to benefit from increased demand for our high-quality Canadian cannabis, including in Australia, which delivered record revenue in fiscal 24. In addition, an expanded product assortment and improved commercial execution in Poland, the Czech Republic, and Germany also contributed to growth in our international markets cannabis business in fiscal 24. Moving on to our Storz and Bickel vaporizer business, exceptional demand for the brand's new Venti portable vaporizer, which was launched early in the third quarter of fiscal 24, required us to double production to meet higher than expected initial demand, when paired with continued demand for other stores and vehicle devices, including the legendary Volcano.

Our international markets candidates business also continues to benefit from increased demand for our high quality Canadian cannabis, including in Australia, which delivered record revenue in fiscal 'twenty four.

In addition, an expanded product assortment and improved commercial execution in Poland, The Czech Republic, and Germany also contributed to growth in our international markets cannabis business in fiscal 'twenty four.

Moving on to our stores and vehicle vaporizer business exceptional demand for the brand's new Vinti portable vaporizer, which was launched early in the third quarter of fiscal 'twenty four required us to double production to meet higher than expected initial demand.

When paired with continued demand for other stores in vehicle devices, including the legendary volcano.

David Eric Klein: This contributed to Storz and Bickel delivering its best fourth quarter ever, with net revenue increasing 43% year-over-year. In addition to these advancements, in our commercial businesses, we also executed a number of actions to strengthen Canopy's balance sheet in fiscal 24. Collectively, these actions reduced Canopy's debt by over $700 million in Fiscal 24, which brings our total debt reduction to over $1.1 billion since the beginning of Fiscal 23. Further, subsequent to the end of fiscal 24, we have also eliminated a $100 million short-term debt obligation and extended the maturity of a convertible note by five years.

This contributed to stores and vehicle delivering its best fourth quarter ever with net revenue, increasing 43% year over year.

In addition to these advancements.

In our commercial businesses. We also executed a number of actions to strengthen <unk> balance sheet in fiscal 'twenty four.

Collectively these actions reduced cannot be debt by over $700 million in fiscal 'twenty, four which brings our total debt reduction to over $1 1 billion since the beginning of fiscal 'twenty three.

Further subsequent to the end of fiscal 'twenty. Four we have also estimated are eliminated a $100 million short term debt obligation and extended the maturity of the convertible note by five years.

David Eric Klein: As a result, Canopy has no material debt due until March 2026 and has a healthy cash balance of over $200 million. Our strength and balance sheet provide us with the certainty and flexibility required to power future growth, and we believe positions Canopy ahead of our industry peers. Our commercial businesses are showing momentum as we exit Fiscal 24, and our plans set the stage for a Fiscal 25 that we believe will be a banner year for Canada. Our Canadian production platform continues to deliver high-quality flour that is winning and retaining customers both domestically and internationally.

As a result canopy has no material debt due until March 2026, and has a healthy cash balance of over $200 million.

Our strengthened balance sheet provides us with the certainty and flexibility required to power future growth and we believe positioned cannot be ahead of our industry peers.

Our commercial businesses are showing momentum as we exited fiscal 'twenty four and our plan set the stage for a fiscal 'twenty five that we believe will be a banner year for Kennedy.

Our Canadian production platform continues to deliver high quality flower that is winning and retaining customers both domestically and internationally.

David Eric Klein: Upgrades are also already underway at our Kincardin facility to increase our flower capacity, in addition to securing flower through strategic procurement from third-party producers. And, as the Canadian cannabis market continues to mature and consolidate, we expect excess capacity within the industry to present Canopy with tangible opportunities to accelerate the pace of the market, avoid capital investments until critical sales volumes are achieved, and to provide us with surge capacity during peak periods. We believe our plans, which reflect our focus on profitable growth versus chasing market share at all costs, will deliver healthy annual growth in Canada in fiscal 25, with stronger growth in the back half of the year.

Upgrades are also already underway at our Kincardine facility to increase our flower capacity. In addition to securing flowers through strategic procurement from third party producers.

And as the Canadian candidates market continues to mature and consolidate we expect excess capacity within the industry to present cannot be with tangible opportunities to accelerate speed to market avoid capital investments until critical sales volumes are achieved and to provide us with surge capacity during peak.

Periods.

We believe our plans, which reflect our focus on profitable growth versus chasing market share at all costs, we will deliver healthy annual growth in Canada in fiscal 'twenty five with stronger growth in the back half of the year.

David Eric Klein: This growth will be driven by expanded flower capacity, increased distribution, a strengthened sales force, and share gains across the pre-roll, vape, and soft gel categories through the introduction of new products which are arriving in the market as we speak. We also believe our plans for Canopy's international business will deliver healthy annual growth in Fiscal 25. In addition to continued gains across our international markets, we anticipate Germany's legalization of cannabis will drive a significant increase in the size of the country's medical market as more doctors become comfortable prescribing cannabis and more patients explore its medical benefits.

This growth will be driven by expanded flower capacity increase distribution, our strengthened sales force and share gains across the pre roll vape and softgel categories through the introduction of new products, which are arriving in the market as we speak.

We also believe our plans for canopies international business will deliver healthy annual growth in fiscal 'twenty five.

In addition to continued gains across our international markets, we anticipate Germany's legalization of cannabis will drive a significant increase in the size of the country's medical market as more doctors become comfortable prescribing candidates and more patients explore its medical benefits.

David Eric Klein: As a long-term leader in Germany, we believe Canopy is well-positioned to capitalize on this growth, and we're actively working to expand our supply to Germany and to add additional third-party European-based suppliers to our office. Looking to our premium Storz & Bickel vaporizer business, we plan to keep building on the brand's momentum and expect continued demand for the Venti, as well as expanded distribution in the U.S., to drive significant growth for Storz & Bickel in fiscal 25.

As a long term leader in Germany, We believe <unk> is well positioned to capitalize on this growth and we're actively working to expand our supply to Germany and to add additional third party European based suppliers to our offering.

Looking to our premium stores in vehicle Vaporizer business, we plan to keep building on the brand's momentum and expect continued demand for the <unk>.

As well as expanded distribution in the U S to drive significant growth for stores and vehicle in fiscal 'twenty five.

David Eric Klein: We also feel that this homegrown German brand will benefit from greater cannabis adoption among German consumers. Further illustrating the strength of Storz & Bickel's connection and importance in the German cannabis industry, I'm pleased to highlight that Juergen Bickel, Canopy's Managing Director of Storz & Bickel and the brand's co-founder, was recently elected as a board member of the German Cannabis Business Association.

We also feel that this homegrown German brand will benefit from greater candidates adoption among German consumers.

Further illustrating the strength of stores and vehicles connection in importance in the German cannabis industry I'm pleased to highlight that European vehicle canopies, managing director of stores in vehicle and the brands co founder was recently elected as a board member of the German cannabis business Association.

David Eric Klein: We're pleased that Canopy and Storz & Bickel have strong representation within the association, the largest of its kind, as it continues to play a critical role in shaping the advancement of the medical and recreational cannabis markets in Germany. Shifting focus to the U.S., Canopy USA is moving forward rapidly, and I would like to take the opportunity to reiterate our thanks to Canopy shareholders for their overwhelming support for the resolution required to advance this strategy.

We're pleased that canopy and storz <unk> bickel have strong representation within the association the largest of its kind as it continues to play a critical role in shaping the events that the advancement of the medical and recreational cannabis markets in Germany.

Shifting focus to the U S cannot be USA is moving forward rapidly and I would like to take the opportunity to reiterate our thanks to canopy shareholders for their overwhelming support for the resolution required to advance this strategy.

David Eric Klein: Overall, we remain highly optimistic about the potential of CanopyUSA, which continues to lay the groundwork for accelerated growth across a number of key state-level cannabis markets, and for the quarter ended March 2024, we want to finalize plans for expansion into three new states, New York, Connecticut, and Vermont, while also launching new gummy skews in Colorado to continue expanding the brand's product assortment. In addition, JETI's award-winning products have launched in the state of New Jersey as the JETI team takes the best of the West Coast to the Northeast.

Overall, we remain highly optimistic about the potential of canopy USA, which continues to lay the groundwork for accelerated growth across a number of key state level candidates markets.

In the quarter ended March 2024.

To finalize plans for expansion into three New States, New York, Connecticut, and Vermont, while also launching new gummies Skus in Colorado to continue expanding the brand's product assortment.

In addition, <unk> award winning products launched in the state of New Jersey as the jetty team takes the best of the West coast to the northeast.

David Eric Klein: It's also important to note that Jetty's solventless vapes rank as the number one live rosin vape nationally in the U.S., which is really quite impressive when you consider that Jetty vape products are currently available in only four states.

It's also important to note that journey solvent, let's face ranked as the number one live rosin nationally in the U S, which is really quite impressive when you consider that journey based products are currently available in only four states.

David Eric Klein: California, Colorado, New York, and more recently, New Jersey. Shifting to acreage, I'd like to take the opportunity to acknowledge that the company has recently been operating as a distressed asset. However, we believe that Acreage continues to have tremendous ups and downs. Recently, Acreage entered the New York market and continues to hone its presence in other key states, including Ohio, the seventh largest state in the U.S., which is legalizing adult use in the month of June, and where its operations are well-positioned with dispensaries in Cleveland, Canton, Akron, Columbus, and Wicklow.

California, Colorado, New York and more recently New Jersey.

Shifting to acreage I'd like to take the opportunity to acknowledge that the company has recently been operating as a distressed asset.

However, we believe that acreage continues to have tremendous upside.

Recently acreage entered the New York market and continues to hone its presence in other key states, including Ohio, The seventh largest state in the U S, which is turning adult use in the month of June and where its operations are well positioned with partners dispensaries in Cleveland Canton Akron Columbus.

In Wickliffe.

David Eric Klein: Notably, in addition to locations in the largest population centers in the state, Acreage's retail operations have received multiple Best Dispensary Awards over the last four years. Acreage also has a Tier 1 cultivation and processing facility in the state with significant expansion potential. We believe that with this structure and its entry into the CanopyUSA ecosystem, Acreage is well positioned to realize significant and profitable growth ahead. The timing for the advancement of our U.S. strategy is also aligning nicely with major strides on the regulatory front, including rescheduling.

Notably in addition to locations and the largest population centers in the state.

Acreage is retail operations have received multiple best Dispensary awards over the last four years.

Acreage also has the tier one cultivation and processing facility in the state with significant expansion potential.

We believe that with this setup.

And its entry into the canopy USA ecosystem acreage is well positioned to realize significant and profitable growth ahead.

The timing for the advancement of our U S strategy is also aligning nicely with major strides on the regulatory front, including rescheduling.

David Eric Klein: We've been unequivocal in our support for rescheduling and believe that this change represents a leap forward for the industry. And from a financial perspective, I'd like to emphasize that rescheduling is especially significant as it'll provide an immediate and meaningful improvement to the cash flow of all state legal cannabis businesses, including those within Canopy U.S. In closing, Fiscal 24 was a year of significant progress for canopy growth, where we demonstrated our capabilities and our enduring belief in the opportunity that is the global canopy.

We've been unequivocal and our support for rescheduling and believe that this change represents a leap forward for the industry.

And from a financial perspective, I'd like to emphasize that rescheduling is especially significant as it will provide an immediate and meaningful improvement to the cash flow of all state legal cannabis businesses, including those within Canada USA.

In closing fiscal 'twenty four was a year of significant progress for canopy growth, where we demonstrated our capabilities and our enduring belief in the opportunity that is global cannabis.

David Eric Klein: Looking to the year ahead, we're optimistic about our future. We have great exposure to the most attractive markets. We've got great brands, and we have a strong and experienced team. We continue to believe the opportunities ahead are significant, and with the plans we have in place, we think Fiscal 25 is poised to be Canopy's best year yet. With that, I'll pass the call to Judy to review our financials in greater detail.

Looking to the year ahead, we are optimistic about our future.

Great exposure to the most attractive markets, we've got great brands and we have a great have a strong and experienced team.

We continue to believe the opportunities ahead are significant and with the plans. We have in place we think fiscal 'twenty five is poised to be canopies best year yet.

Speaker Change: With that I'll pass the call to Judy to review our financials in greater detail.

Judy Hong: Thank you very much, David, and good morning, everyone. I'll start by reviewing our fourth quarter and full year fiscal 2024 results, including the significant progress we've made across our P&L this year. I'll then discuss additional actions that we've taken to improve our balance sheet and cash flow, followed by our priorities and outlook for fiscal 2025. Let's begin with our fourth-quarter results. Q4 FY24 capped a transformative year for Canopy by showcasing organic revenue growth of 16% compared to Q4 FY23 and a year-over-year improvement in gross margins, adjusted EBITDA, and free cash flow.

Judy: Thank you very much David and good morning, everyone.

Judy: I'll start by reviewing our fourth quarter and full year fiscal 2024 results, including the significant progress we've made across our P&L this year.

Judy: I will then discuss additional actions that we've taken to improve our balance sheet and cash flow followed by our priorities and outlook for the fiscal 2025.

Judy: Let's begin with our fourth quarter results.

Judy: Q4, FY 'twenty four capped a transformative year for canopy.

Judy: Organic revenue growth of 16% compared to Q4 of FY2023.

Judy: On a year over year improvement in gross margin adjusted EBITDA and free cash flow.

Judy Hong: Canopy delivered a consolidated net revenue of $73 million in Q4, with all three business units delivering growth year-over-year, led by Storz & Bickel, which increased its revenue by 43% compared to a year ago. Solid Data Growth Margin in Q4 was 21%, again, a significant improvement compared to 11% last year. Q4 growth margin was negatively impacted by temporary factors in Canada that I'll address later in the call. Full year gross margin was 27%, and cash gross margin, adding back non-cash depreciation expenses and costs, was 35%.

Judy: Cannot be delivered consolidated net revenue of $73 million in Q4 with all three business units delivering growth year over year led by Storz, <unk>, bickel, which increases revenue by 43% compared to a year ago.

Judy: Consolidated gross margin in Q4 on.

Judy: 21% again, a significant improvement compared to 11% last year.

Judy: Q4 gross margin was negatively impacted by temporary factors in Canada.

Judy: Later in the call.

Judy: Full year gross margin was 27% and cash gross margin, adding back noncash depreciation expenses and costs was 35%.

Judy Hong: Before Justa Divista, there was a loss of $15 million, an improvement of 63% versus last year. Free cash flow was an outflow of $23 million, an improvement of $75 million compared to Q4 of last year, and nearly a 50% improvement over the last quarter. I'd like to now review the results of our key businesses in more detail, including progress against their path to profitability. Starting with Canada.

Judy: Q4, adjusted EBITDA was a loss of $15 million, an improvement of 63% versus last year.

Judy: Free cash flow was an outflow of $23 million, an improvement of $75 million compared to Q4 of last year and nearly a 50% improvement over the last quarter.

Judy: I'd like to now review the results of our key businesses in more detail, including progress against our path to profitability.

Judy: Starting with Canada.

Judy Hong: Q4 net revenue was $37 million, a 4% increase compared to a year ago. Canada medical sales continue to grow strongly, increasing 16% compared to last year, benefiting from customer mix towards a greater number of insured patients and a larger product assortment in the spectrum online source. Our adult-use B2B business was down 4% as growth in the 7acres brand and contributions from Wana Edibles was offset by declines in the toy brand this quarter as we were supply constrained on certain scoops.

Judy: Q4, net revenue was $77 million up 4% compared to a year ago.

Judy: Canada Medical sales continued to grow strongly increasing 16% compared to last year benefiting from customer mix towards a greater number of insured patients and larger product assortments and the spectrum hotline sort.

Judy: Our adult use <unk> business was down 4% as growth in seven acres, Brian and contributions from Walnut Edibles was offset by the declines in the tweak brand this quarter as we were supply constrained on certain skin.

Judy Hong: Canada's gross margin in Q4 was 0%, and cash gross margin, adding back non-cash depreciation costs and costs, was 13%. Let me unpack Canada's growth margin for Q4, which came in softer than planned. We continue to generate year-over-year reductions in costs from the Cost Reduction Program. However, our Q4 growth margin was negatively impacted by a few temporary factors. First, we experienced lower cultivation yields at the King Cardin facility, driven by seasonality and unplanned disruptions, which resulted in higher-than-expected inventory costs per unit. Second, with lower cultivation yields, the utilization of our manufacturing operation was reduced, driving underabsorption of our indirect costs.

Judy: Canada gross margin in Q4, it was zero percent and cash gross margin, adding back noncash depreciation costs and cost was 13%.

Speaker Change: Let me Unpack, Canada gross margin for Q4, which came in softer than planned.

Speaker Change: We continue to generate year over year reductions in cost from the cost reduction program. However, Q4 gross margin was negatively impacted by a few temporary factors.

Judy Hong: Lastly, the consumption of higher-cost inventory, which was produced prior to our shuttering of the former Hershey facility, also negatively impacted gross margins. However, all of these factors are transient, and we're already seeing improvement in cultivation yields and higher utilization of our manufacturing operation in Q1. And notwithstanding the lumpiness in our Canadian gross margins this year, we're pleased that our Canadian business achieved a 31% cash gross margin performance in full year fiscal 2024.

Judy Hong: In addition, we expect further improvement in Canada's gross margins and FY25, driven by the installation of new LED lighting at King Cardin in the first half of fiscal 2025 is expected to increase their cultivation yields in the upcoming winter months. In addition, we've already expanded grow rooms to increase their cultivation capacity.

Speaker Change: First we experienced lower cultivation yields at the Kincardine facility, driven by seasonality and unplanned disruptions, which resulted in higher than expected inventory cost per unit.

Speaker Change: Second with lower cultivation yield the utilization of our manufacturing operation was reduced driving under absorption of our indirect cost.

Speaker Change: Lastly, the consumption of higher cost inventory, which was produced prior to our shuttering of the former Hershey facility also negatively impacted gross margins.

Speaker Change: All of these factors are transient and we're already seeing improvement in cultivation yields and higher utilization of our manufacturing operation in Q1.

Speaker Change: And notwithstanding the lumpiness in our Canadian gross margins. This year, we are pleased that our Canadian business achieved 31% cash gross margin performance and full year fiscal 2024.

Speaker Change: In addition, we expect further improvement in Canada gross margins in FY 'twenty five driven by installation of new led lighting at Kincardine into first half of fiscal 2025 is expected to increase our cultivation yields and the upcoming winter months. In addition, we've already expanded.

Speaker Change: <unk> to increase our cultivation capacity.

Judy Hong: Strategic sourcing of our flower supply at favorable costs is also expected to reduce our overall flower cost. And a new and flexible pre-roll machine is now up and running and is expected to significantly increase pre-roll production and reduce labor costs. International markets' candidate sales increased 32% year-over-year.

Speaker Change: Strategic sourcing of our flowers supply of favorable cost is also expected to reduce our overall flower cost and.

Speaker Change: And are you and flexible pre rolls machine is now up and running and is expected to significantly increase pre well production and reduced labor cost.

Speaker Change: International markets, Canada sales increased 32% year over year, we saw outsized triple digit sales growth in Poland. In Q4, Germany also grew at a double digit rate and these were partially offset by the declines in assortment nickel device sales in Australia in Q4.

Judy Hong: We saw outsized triple-digit sales growth in Poland in Q4. Germany also grew at a double-digit rate, and these were partially offset by the declines in source and vehicle device sales in Australia in Q4. International market cannabis gross margin was 40% in Q4 FY24, driven by a favorable shift in country mix, with higher margin pull in sales contributing to a greater portion of sales this year as compared to the prior year period.

Speaker Change: International markets, Canada gross margin was 40% in Q4, FY 'twenty four driven by a favorable shift in country mix with higher margin, Poland sales contributing to a greater portion of sales this year as compared to the prior year period.

Judy Hong: The rhythmical revenue of $22 million in Q4 was up 43% compared to last year, and also up 20% sequentially. We saw continued strong consumer demand for the new Venti portable vaporizer that was launched in Q3, and we successfully ramped up production to meet demand for the Venti.

Speaker Change: Tourism vehicle revenue of $22 million in Q4 was up 43% compared to last year and also up 20% sequentially.

Speaker Change: We saw continued strong consumer demand for the new <unk> portable vaporizer that was launched in Q3, and we've successfully ramped up production to meet demand for <unk>.

Judy Hong: And Q4 also benefited from strong distributor and retailer loading of all Storz and Bickel devices ahead of 420 events and sales promotion. Northumbria's growth margin was 41% compared to 34% last year, driven primarily by stronger sales coming from products and geographies that carry higher margins year-over-year. Looking at our SG&A expenses for Q4 fiscal 2024, total SG&A expenses declined 23% year-over-year, primarily driven by the cost reduction program undertaken to date. Q4 fiscal 24 adjusted EBITDA loss was a negative $15 million, an improvement of $25 million compared to a loss of $40 million a year ago.

Speaker Change: In Q4 also benefited from strong distributor and retailer loaded of all stores in vehicle devices ahead of $4 20 events and sales promotions.

<unk> gross margin was 41% compared to 34% last year, driven primarily by stronger sales coming from products and geographies that carry higher margins year over year.

Speaker Change: Looking at our SG&A expenses for Q4 fiscal 2024 total SG&A expenses declined 23% year over year, primarily driven by cost reduction program undertaken to date.

Speaker Change: Q4 fiscal 'twenty four adjusted EBITDA loss was a negative $15 million, an improvement of $25 million compared to a loss of $40 million a year ago.

Judy Hong: Q4 adjusted EBITDA was impacted by a softer gross margin in Canada due to the temporary factors that I outlined earlier in the call. However, international markets and stores in Bicol achieved profitability in Q4 driven by revenue growth and improvement in gross margins year over year.

Speaker Change: Q4, adjusted EBITDA was impacted by a softer gross margin in Canada due to the temporary factors that I outlined earlier in the call.

Speaker Change: International markets and Storz, <unk> Bickel achieved profitability in Q4, driven by revenue growth and improvement in gross margins year over year.

Judy Hong: At least Canada, but for the temporary factors, would have achieved positive adjusted EBITDA exiting fiscal 24. Through the Strategic Transformation Initiatives announced in April 2022 and February 2023, Canopy has now realized $280 million of cumulative cost savings, which is within our announced target cost savings of $270 to $300 million. We've identified additional $10-$15 million of cost reduction opportunities, mostly in corporate G&A, including savings in IT, insurance, professional fees, legal, and public company costs that we expect to realize by the end of fiscal 2025.

Speaker Change: He leaves Canada, but for the temporary factors, we would have achieved positive adjusted EBITDA exiting fiscal 'twenty four.

Speaker Change: Through the strategic transformation initiatives announced in April 2022, and February 2023 canopy has now realized $280 million of cumulative cost savings, which is within our announced target cost savings of $270 million to $300 million.

Speaker Change: We've identified additional $10 million to $15 million of cost reduction opportunities, mostly in corporate G&A, including savings in insurance.

Speaker Change: Insurance professional fees legal and public company cost that we expect to realize by the end of fiscal 2025.

Judy Hong: I'd like to now review our cash flow and balance sheet. Free cash flow was an outflow of $23 million in Q4, an improvement of 77% compared to the prior year. Cash use from continuing operations was $22 million, which included cash interest payments of $18 million, which was down from $36 million last year. Cash flow from investments of $26 million in Q4 included proceeds received from the BioSteel asset sale. And during Q4, we also completed a private placement with proceeds of approximately $47 million, of which $30 million was used to pay down our Senior Secure Return Loan at a discount to FAR.

Speaker Change: I'd like to now review, our cash flow and balance sheet free.

Speaker Change: Free cash flow was an outflow of $23 million in Q4, an improvement of 77% compared to the prior year.

Speaker Change: Cash used from continuing operation was 2000 $20 million to $22 million, which includes cash interest payments of $18 million, which was down from $36 million last year.

Speaker Change: Cash flow from investments of 26 million in Q4 included proceeds received from device deal asset sale and.

Speaker Change: During Q4, we also completed a private placement with proceeds of approximately $47 million of which $30 million was used for pay down of our senior secured term loan at a discount to par.

Judy Hong: According to the balance sheet, as of March 31, 2024, we had $203 million in cash and short-term investments and a debt balance of $597 million. Subsequent to the quarter end, we completed several transactions that further reduced our debt and improved our balance sheet. First, we exchanged $81 million of the principal amount of the $100 million promissory note plus accrued interest held by Constellation into Canopy's exchangeable shares and canceled the remaining balance. Second, we issued a new five-year convertible note with gross proceeds of approximately USD $50 million and exchanged a CAD $28 million note maturing in September 2025 to a note now maturing in May 2029. Third, we've made an additional CAD $7.5 million paydown of the term loan with the proceeds from the BioSteel FSA.

Speaker Change: Turning to the balance sheet as of March 31, 2024, we had $203 million in cash and short term investments and debt balance of $597 million.

Speaker Change: And subsequent to the quarter end, we've completed several transactions that further reduced our debt and improve their balance sheet.

Speaker Change: First we exchanged $81 million of the principal amount of the 100 million promissory note plus accrued interest held by constellation into cannabis exchangeable shares.

Speaker Change: Cancel the remaining balance.

Speaker Change: Second we issued a new five year convertible note with gross proceeds of approximately USD 50 million in exchange the CAD $28 million note maturing in September 2025 to a note now maturing in may of 2029.

Speaker Change: Third we've made additional CAD $7 5 million pay down of the term loan with the proceeds from the <unk> asset sales.

Judy Hong: These actions have significantly enhanced our balance sheet by eliminating substantially all of our short-term debt obligations, reducing the Senior Secure Term Loan Principal Balance from USD 750 million original to now USD 354 million, which matures in March of 2026, and enhancing our cash position, which will provide flexibility to invest for future growth while funding our operations. We remain focused on executing additional activities to further deliver on our commitment to improve our financial position over the coming months.

Speaker Change: These actions have significantly enhanced our balance sheet by eliminating substantially all of our short term debt obligations.

Speaker Change: We do think the senior secured term loan principal balance from USD $750 million original to now USD $354 million, which matures in March of 2026.

Speaker Change: And enhancing our cash position, which will provide flexibility to invest for future growth while funding our operations.

We remain focused on executing additional activities to further deliver on our commitment to improve our financial position over the coming months.

Judy Hong: I'd like to now provide our key priorities and outlook for Fiscal 25. In Canada Cannabis, the business is now on a stable footing, and we're focused on driving growth and profitably gaining market share in both the adult use and medical channels by continuing to invest in product quality and expanding distribution while further improving our margin. In the international market for cannabis, we expect to see growth in our key markets of Germany, Poland, and the Czech Republic and remain focused on ensuring a consistent supply of high quality products, as well as launch new products into these markets in the near term.

Speaker Change: I'd like to now provide our key priorities and outlook for fiscal 'twenty five.

Speaker Change: And Canada cannabis the business is now on a stable footing and we are focused on driving growth and profitably gaining market share in both the adult use and medical channels by.

Speaker Change: By continuing to invest in product quality and expanding distribution, while further improving our margins.

Speaker Change: International market candidates, we expect to see growth in our key markets of Germany, Poland, and Czech Republic, and remain focused on ensuring consistent supply of high quality product as well as launch new products into these markets in the near term.

Judy Hong: For Storz & Bickel, we're focused on accelerating growth in key markets driven by Venti, as well as other product lines, which we believe will mitigate potential impact on Storz & Bickel's Australian sales following a recently implemented vape ban in the NOS Medical Channel. And finally, we also know that the impact from divested businesses will continue to negatively impact reported sales growth, and specifically, FY 2024 results included $21 million of revenue from This Works, which was divested in December of 2023, and $5 million of revenue from Key Leaf, which was divested in February of 2024.

For stores and vehicle, we're focused on accelerating growth in key markets driven by <unk> as well as other product lines, which we believe will mitigate potential impact to stores and vehicles Australian sales. Following our recently implemented as they've been in the last medical channels.

Speaker Change: And finally, we also note that the impact of divested businesses will continue to negatively impact reported sales growth and specifically at $5 2024 results included $21 million of revenue from this works, which was divested in December of 'twenty, three and $5 million of revenue.

Speaker Change: From key leaf, which was divested in February of 2024.

Judy Hong: From a phasing standpoint, we expect stronger year-over-year growth in the second half of our fiscal 2025 driven by increased flower supply and the ramp-up of new products, as well as a lessening impact from divested businesses. We believe that we are on a firm path to achieving positive adjusted EBITDA at the consolidated level, inclusive of corporate costs, driven by sales growth from increased supply and expanded distribution, improvement in gross margins, and additional G&A savings.

Speaker Change: From a phasing standpoint, we expect stronger year over year growth in the second half of our fiscal 2025, driven by increased fiber supply and ramp up of new products as well as lessening impact from divested businesses.

Speaker Change: We believe that we're on a firm path to achieving positive adjusted EBITDA at the consolidated level inclusive of corporate cost driven by sales growth from increased supply and expanded distribution improvement in gross margins and additional G&A savings.

Judy Hong: In closing, we're excited about the growth opportunity ahead of us and now have a strong foundation in place to achieve healthy profit margins and enhance shareholder value over time. Now, we'll take questions from the analysts.

Speaker Change: In closing we're excited about the growth opportunity ahead of US now have a strong foundation in place to achieve healthy profit margins and enhance shareholder value over time.

Speaker Change: This concludes my prepared comments, we will take questions from the analysts.

Speaker Change: Thank you.

Operator: Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the number on your touch-tone phone. To ensure an efficient call that gets to the questions of as many analysts as possible, analysts are requested to ask an initial question and then, if necessary, re-enter the question queue to ask any additional questions. The first question comes from Aaron Grey at Alliance Global. Please go ahead.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.

Speaker Change: Do you have a question. Please press the star followed by the one on your Touchtone phone.

Speaker Change: To ensure an efficient call back after the questions of as many analysts as possible.

Speaker Change: The requested to ask an initial question and then if necessary re enter the question queue to ask any additional questions.

Speaker Change: First question comes from Aaron Grey at ally.

Speaker Change: As global please go ahead.

Speaker Change: Hi, Thank you very much for the question here. So first question for me or my question, Hi, Julien how are you.

Aaron Thomas Grey: Hi, and thank you very much for the question here. So, first question from me, or my question: Hi Judy, how are you?

Judy Hong: Regarding your comments on the gross margin, thanks for the color in terms of, you know, how it's transitory in nature somewhat. Just if you could provide some commentary in terms of the cadence of the improvements from the greater utilization and some of the other initiatives you have, such as the lighting and expanded grow rooms. You know, how should we think about the timing of that improvement? You've seen gross margins of, you know, 30% or more within, you know, the Canadian cannabis segment. So how do we think about ramping that up? And then the impact on the overall, you know, profitability of the company from the Canadian gross margins going forward? Thank you.

Speaker Change: Regarding your comments on the gross margin. Thanks for the color in terms of how that's transitory in nature somewhat.

Speaker Change: Just if you could provide some commentary in terms of the cadence of the improvements from the greater utilization in some of the other initiatives you have by the lighting and extended grow rooms.

Speaker Change: I should think about the timing of that improvement you have seen gross margins.

Speaker Change: 30% or more within the <unk>.

Speaker Change: Canadian cannabis segments. So how do we think about the ramping of that and then the impact of the overall profitability of the company from a Canadian gross margins going forward. Thank you.

Judy Hong: So, if you take a step back, we did deliver a significant improvement on a year-over-year basis in our Canadian business, with a four-year gross margin of 16% and cash gross margin of 31%, and I think on a four-year basis that's within our expectation of achieving close to mid-30% cash gross margin post all the restructuring actions that we've taken in Q1. I think if you think about the Q4 margin, as I said on the call, really just a few transient factors that negatively impacted margins.

Aaron Thomas Grey: Sure sure Aaron So if you take a step back we did deliver a significant improvement on a year over year basis, and our Canadian business with full year gross margin of 16% and cash gross margin of 31% I think on a full year basis and thats within our expectation of.

Aaron Thomas Grey: Achieving close to mid 30% cash gross margin post all the restructuring actions that we've taken in Q1.

Aaron Thomas Grey: I think if you think about the Q4 margin as I said on the call.

Aaron Thomas Grey: Really.

Aaron Thomas Grey: Few transient factors that negatively impacted margins.

Judy Hong: I estimate those margins, those factors would have impacted those margins by, you know, the magnitude of several million dollars, so if you adjust for those, I think we're kind of back to a low to mid-30% gross margin in Canada. If you look at Q1 and beyond, so just really looking at the rest of Fiscal 25, we see further improvement, as I said on the call, with all of the improved actions that we're taking in Kincardine.

Aaron Thomas Grey: Made those margins.

Aaron Thomas Grey: Those factors would have impacted the gross margin side.

Aaron Thomas Grey: The magnitude of several million dollars. So if you adjust for those I think we're kind of back to the.

Aaron Thomas Grey: Low to mid 30% gross margin.

Aaron Thomas Grey: In Canada, if you.

Aaron Thomas Grey: You look at Q1 and beyond so just really looking at the rest of the fiscal 2005, we see further improvement I said on the call.

Aaron Thomas Grey: With all of the improved.

Aaron Thomas Grey: The actions that we're taking in kincardine some of that is going to be a bit more back half loaded. So the increased capacity from on the flower side phone expanded grow rooms will come in a little bit earlier, but I think the kincardine delighting PLD installation that's happening sbe.

Judy Hong: Some of that is going to be a bit more cash loaded, so the increased capacity on the flower side from expanded grow rooms will come in a little bit earlier, but I think Kincardine, the lighting, the LED installation that's happening in the coming months, and that will really help the winter months as we go into the back half of the year. So all in all, we think the Canada cash gross margin should be in the mid-to-high 30% for the four-year period, probably stronger in the back half versus the first half, but we're pleased to really show continued progress on the Canada front, and I do think that this will be a positive driver in achieving positive adjusted EBITDA at the consolidated level, particularly as you think about the back half of the year. Thank you. The next question comes from John Zamparo from CIBC. Go ahead.

Aaron Thomas Grey: And in the coming months and that will really help the winter months as we go into the back half of the year. So all in all we think the Canada cash gross margin.

Aaron Thomas Grey: Should be in the mid <unk> mid to high 30% for the full year basis, probably stronger in the back half versus first half, but we're pleased to really show continued progress on the Canada funds and I do think that this will be a.

Aaron Thomas Grey: <unk> driver in achieving positive adjusted EBITDA at the consolidated level, particularly as you think about the back half of the year.

John Zamparo: Thank you. The next question comes from John Zamparo from CIBC. Please go ahead.

Speaker Change: Thank you next question comes from Johnson <unk> from CIBC. Please go ahead.

Speaker Change: Thank you. Good morning. My question is on the balance sheet and I'm trying to better understand the comments about being able to invest for growth.

Speaker Change: And I wonder, how we should interpret that given the level of debt remaining and what is the plan to repay that debt.

Judy Hong: Sure. Thanks, John. So, as I said on the call, I think that the big change in terms of our financial position is that we don't have any near-term debt maturity of any substantial amount. In fact, the next tranche of the debt maturity is in March of 2026. We think that our underlying businesses are also showing improvement, that we're reducing cash burn in a significant way, and we've been able to also reduce our interest expenses in a meaningful way as we've reduced our debt.

Speaker Change: Sure. Thanks.

John: Thanks, John So as I said on the call I think that the big change in terms of our financial position is that we don't have any near term debt maturity of any substantial amount. The really the next tranche of the debt maturity is in March of 2026.

John: Think that our underlying businesses are also showing improvement that we're reducing our cash burn in a significant way and we've been able to also reduced our interest expenses in a meaningful way as we've reduced our debt.

Judy Hong: So, really, investing for growth is just given our cash position that we have today, as well as the ability to really deal with the maturity of debt in a prolonged time frame. I think it really gives us the flexibility to look for opportunities to invest in the greatest potential markets that we operate in as we speak. That doesn't mean that we are going to be investing in an asset-heavy way. I think we've really transitioned to really being asset-light and opportunistic in finding partners, but I think it just gives us a lot more flexibility to look for those opportunities with the improved balance sheet position.

John: So really the investing for growth is just given our cash position that we have today as well as the ability to.

John: Really deal with the maturity of debt in a prolonged time frame I think it really gives us the flexibility to look for opportunities to invest in our in the greatest potential markets that we operate in.

John: As we speak.

John: That doesn't mean that we are going to be investing in.

John: In asset.

John: Heavy weight I think we've really transitioned to really being asset light and opportunistic in finding partners, but I think it just gives us a lot more flexibility to look for those opportunities with the improved balance sheet position.

Operator: Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star followed by 1. The next question comes from Yi-Wan Kang at Canada Corp Genuity. Please go ahead.

Speaker Change: Thank you, ladies and gentlemen, as a reminder, should you have a question. Please press star followed by one.

Speaker Change: Next question comes from <unk> <unk> at Canaccord Genuity. Please go ahead.

Yi-Wan Kang: Hi there, this is Yael and Kang on behalf of Matt Bottomley. Thank you for the question. My question is just on the international segment. Obviously, you guys saw 100% growth quarter over quarter on the top line under the segment, and you guys called out the continuous strength in Germany and Poland alongside some non-recurring US CBD business opportunities there that overall helped the top line sequential growth there. Can you provide more color behind this US business opportunity? And if you have any plans to kind of expand on this going forward? Because it seems like it also had kind of a positive impact on the margin under the segment as well. Thanks. Yeah.

Speaker Change: Hi, there this is Darren King on behalf of Matt Pardon me. Thank you for the question.

My question is just on the international segment obviously.

Speaker Change: <unk> has all the percent growth quarter over quarter.

Speaker Change: The top line on that segment and you guys called out the continued strength in Germany and Poland alongside.

Speaker Change: So not nonrecurring use CVT business opportunity there that overall health.

Speaker Change: Top line sequential growth there.

Speaker Change: Can you provide more color behind this USA business opportunity and if you have any plans to kind of expand on this going forward because it seems like it also had kind of a positive impact on the market under that had been resolved.

Judy Hong: Yeah, I think I can take that. I mean, I think if you look at our international markets, you really should think about our key priority markets, Germany, Poland, Australia, and the Czech Republic. The US CBD business, as you may recall, has evolved within the Canopy organization. We've really been looking at a very, very targeted approach with that business as the regulatory unlock, frankly, hasn't happened the way that we thought we would. We have also decided that the best place for the US CBD business to reside is actually Canopy USA.

Speaker Change: Yes, I think I can take that I mean, I think if you've looked at our international markets you really should think about our key priority markets, those Germany, Poland Australia.

Speaker Change: With probably the U S. The CVT business as you May recall has evolved within the canopy organization, we've really been looking at very very targeted approach with that business as the regulatory of not frankly hasnt happened the way that we thought we would we have also.

Speaker Change: <unk> decided that the best place for the U S. CBD business to reside is actually cannot be USA and so we are in the process of winding down the business at least from the canopy perspective, and then transitioning that business over to Kenneth USA that we expect to happen sometime in Q2 of <unk>.

Judy Hong: And so we are in the process of winding down the business, at least from a Canopy perspective, and then transitioning that business over to Canopy USA, which we expect to happen sometime in Q2 of our fiscal 2025.

Speaker Change: For fiscal 2025.

Pablo Ernesto Zuanic: Thank you. The next question comes from Pablo Zuanic at Zuanic and Associates. Please go ahead.

Speaker Change: Thank you next question comes from Pablo <unk> Associates. Please go ahead.

Pablo Ernesto Zuanic: Thank you. Good morning, everyone.

Speaker Change: Thank you and good morning, everyone.

David Eric Klein: David, just regarding Canopy USA, can you remind us about what's left, or has everything been done in terms of shareholder approvals and also approval in terms of acreage and WANAP? And related to that, if you can remind us, assuming that rescheduling doesn't meet your standard of federal permissibility, what actually changes for those U.S. assets, right? I'm thinking acreage; they need to fund the expansion in Ohio, but if you don't have federal permissibility yet, how can you help them, and how does the Canopy USA structure, if in any way, help them to achieve that type of funding and potential to fund growth? Thank you.

David: David just regarding kind of the USA can you remind us about what what's left or has everything been done in terms of shareholder approvals and also providing them a good each and one of them.

David: And related to that if you can remind us assuming there'll be scheduling doesn't meet your standards federal permissibility.

Speaker Change: Actually changes for those U S assets right I'm thinking acreage they need to fund the expansion in Ohio, but if you don't have federal Permissibility, yet how can you help them and how has it kind of be how does it kind of a USA structure or anything any way to help them to achieve that type of funding.

Speaker Change: Potential to fund growth. Thank you.

David Eric Klein: Yes, Pablo, in terms of approvals, we don't need any shareholder approval or anything of that nature. We do need to go through the approval process in each state where we have a license, and so what we've done is we've exercised our option, Q-SYS has exercised their option, to purchase Juana and Jetty. It's going through the regulatory approval process right now, and we don't expect there to be any problems with that approval.

Speaker Change: Yes so.

Speaker Change: Yes, so bubble in terms of approvals, we don't we don't need any shareholder approval or anything of that nature, we do need to go through the approval process in each state, where we have a license and so what we've done is we've exercised our option reduces exercised their option to purchase Juana and Jody.

Speaker Change: That's going through the regulatory approval process right now we don't expect there to be any <unk>.

Speaker Change: Problems with those approvals canopy has the obligation to exercise its right.

David Eric Klein: Canopy has the obligation to exercise its right to purchase acreage and then move it into Canopy USA. That hasn't happened yet, but we expect that'll happen in the near term. We don't see any major regulatory hurdles, but as you know, it'll take some time to get through each individual state's process.

Speaker Change: To purchase acreage and then and then move it into Canada, USA that Hasnt happened, yet, but we expect that will happen in the near term.

Speaker Change: We don't we don't see any major regulatory hurdles, but as you know.

Speaker Change: It will take some time to get through each individual stage process in terms of the ability like what will happen with the businesses.

David Eric Klein: In terms of the ability, like what will happen with the businesses and how they improve their capital situation across Q-SYS, I really think it is a function of putting those Q-SYS businesses together. Not included in our cash balance is a significant cash balance sitting at Juana and Jetty, which the Q-SYS assets would all have access to, and so we expect that acreage's challenges related to capital structure will be able to be resolved through a kind of amalgamation with Q-SYS.

How they improve their capital situation.

Speaker Change: Across tusa I really think it is a function of putting those CUSIP businesses together.

Speaker Change: Not included in our cash balances is.

Speaker Change: Our significant cash balance sitting.

Speaker Change: Sitting at one and jetty.

Speaker Change: The <unk> assets would all have access to.

Speaker Change: And so so we expect actually.

Speaker Change:

Speaker Change: That acreage as challenges related to capital structure, we will we'll be able to be resolved.

Speaker Change: <unk> kind of amalgamation with cancer and also keep in mind when.

David Eric Klein: And also keep in mind... When we put those businesses together, there will be top-line synergies available to all of the QSAT entities, but there will also be some significant bottom-line synergies available as well when you eliminate the public company costs that are currently associated with acreage.

Speaker Change: When we put those businesses together.

Speaker Change: There will be topline synergies available to all of the <unk> entities, but there'll also be some significant bottom line synergies available as well when you eliminate the public company costs that are currently.

Speaker Change: Associated with acreage.

Operator: Thank you. This concludes the conference call. I will turn the call back over to Mr. Klein for final remarks.

Speaker Change: Thank you. This concludes the conference call I will turn the call back over to Mr. <unk> for final remarks.

David Eric Klein: Thank you for attending today's call. To wrap up, as we started, we're singularly focused on cannabis. Our businesses are growing and have delivered healthy improvements in gross margins. Our business is approaching positive adjusted EBITDA on a consolidated basis, and Canopy USA is moving forward rapidly. We're excited about where our business is going, and I firmly believe that Canopy offers a unique option for exposure to growth across the world's most exciting cannabis market.

Speaker Change: Alright, great. Thank you for attending today's call to ramp up as we started we're singularly focused on candidates are businesses are growing and they.

Speaker Change: Have delivered healthy improvements in gross margins our business is approaching positive adjusted EBITDA on a consolidated basis and cannot be USA is moving forward rapidly. We're excited about where our business is going and I firmly believe that cannot be offers a unique option for exposure to growth across the worlds most exciting candidates markets.

David Eric Klein: Thanks again for joining us, and I encourage you to try some of our outstanding products as you enjoy the summer ahead. Our investor relations team will be available to answer additional questions. Have a great day, and thank you, everyone.

Speaker Change: Thanks, again for joining us and I encourage you to try some of our outstanding products as you enjoy the summer.

Our Investor Relations team will be available to answer additional questions have a great day and thank you everyone.

Operator: This concludes Canopy Growth's fourth quarter and fiscal year 2024 financial results conference call. A replay of this conference call will be available until August 28, 2024, and can be accessed following the instructions provided in the company's press release issued earlier today. Thank you, everyone, for attending today's call.

Speaker Change: This concludes canopy growth's fourth quarter and fiscal year 2024 financial results Conference call.

Speaker Change: This conference call will be available until August 28, 2024, and can be accessed following the instructions provided in the Companys press release issued earlier today. Thank.

Speaker Change: Thank you everyone for attending today's call.