Q1 2025 Aurora Cannabis Inc Earnings Call

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Operator: Hello, everyone, and welcome to the Aurora Cannabis Incorporated fiscal first quarter 2025 conference call. At this time, all participants are in list and only mode. A question and answer session will follow the formal presentation. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. This conference call is being recorded today, Wednesday, August 7, 2024. If you require operator assistance, please press star then zero.

Operator: Hello everyone, and welcome to the Aurora Cannabis Incorporated fiscal first quarter 2025 conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. This conference call is being recorded today, Wednesday, August 7th, 2024. If you require operator assistance, please press star then zero. I will now turn the conference over to your host, Kevin Niland, Director of Strategic Finance and Investor Relations. Please go ahead.

Speaker Change: Hello, everyone and welcome to the Aurora cannabis incorporated fiscal first quarter 2025 conference call. At this time all participants are in listen only mode. A question and answer session will follow the formal presentation.

Speaker Change: You ask a question you May press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

Speaker Change: This conference call is being recorded today Wednesday August seven 2024, if you require operator assistance. Please press Star then zero.

Kevin Niland: I will now turn the conference over to your host, Kevin Nyland, Director, Strategic Finance and Investor Relations. Please go ahead.

Speaker Change: I will now turn the conference over to your host Kevin Island Director Strategic Finance and Investor Relations. Please go ahead.

Kevin Niland: Hello everyone, and thank you for joining us. I'm the line with me are Miguel Martin, CEO, Ananth Krishnan, and Simona King, CFO. This morning, Aurora issued a news release announcing her fiscal 2025 first quarter financial results. Financial statements, NDNA, and this news release are available on our IR website, and also we act to see a Cedar Club, an aid card.

Kevin Island: Hello, everyone and thank you for joining us.

Kevin Island: With me are Magellan Martin.

Soaking: So on a king CFO.

Speaker Change: Aurora issued a news release announcing our fiscal 2025 first quarter financial results.

Kevin Niland: Our financial statements, MD&A, and this news release are available on our IR website and can also be accessed via CDR Plus and EdCard. During today's conference call, listeners are reminded that certain matters could constitute forward-looking statements that are subject to risks and uncertainties related to our future financial or business performance. Actual results could differ materially from those anticipated in those forward-looking statements. After prepared remarks by Miguel and Simona, we'll conduct a question and answer session covering all of this. With that, I'll turn the call over to Miguel.

Speaker Change: All statements MD&A in this news release are available on our IR website counts reactive via SEDAR and Edgar.

Kevin Niland: Today's conference call: this is a reminder that certain matters could constitute what looking statements are subject to risks and uncertainties related to our future financial or business performance. Actual results could differ materially from those anticipated and those forward-looking statements. The risk factors that may affect actual results are detailed in our Annual Information Form and other periodic following and registration statements. These documents make some of the access to your Cedar Club and Aid card.

Speaker Change: Today's conference call listeners are reminded that certain matters could constitute forward looking statements are subject to risks and uncertainties related to our future financial or business performance.

Speaker Change: Results could differ materially from those.

Speaker Change: And therefore looking statements.

Speaker Change: The risk factors that may affect actual results are detailed in our annual information form and other periodic filings and registration statement.

Speaker Change: These documents.

Speaker Change: Well thank God.

Kevin Niland: On prepareable marks when Miguel and Simona will conduct a question and answer session that are covering on us.

Speaker Change: <unk> prepared remarks blended gallons Milner will conduct a question and answer session called bring out of it.

Kevin Niland: With that, I'll turn the call over to Miguel. Please go ahead.

Speaker Change: I'll turn the call over to Mikael. Please go ahead.

Miguel Martin: Thank you, Kevin. Having reported our previous fiscal quarter just a few weeks ago, we'll be relatively brief in our prepared remarks. Q1 2025 was a milestone period for Aurora, and we cannot be more pleased with the result that we'll be sharing with you today. We grew our top line, the 83.4 million, which included record revenue in Canadian medical cannabis, international medical cannabis, and planned propagation during Bebo's seasonally strongest quarter. We take great pride in Aurora being the global medical cannabis leader within nationally legal markets. This enables us to capitalize on rapidly evolving opportunities in countries around the world.

Miguel Martin: Thank you, Kevin. Having reported our previous fiscal corridors a few weeks ago, we'll be relatively brief in our prepared remarks.

Speaker Change: Thank you, Kevin having reported our previous fiscal quarter, just a few weeks ago, we will be relatively brief in our prepared remarks.

Speaker Change: Q1, 2025 was a milestone period for Aurora and we could not be more pleased with the results that we will be sharing with you today.

Speaker Change: We grew our topline to $83 4 million, which included record revenue and Canadian medical cannabis International medical cannabis and plant propagation during be both seasonally strongest quarter.

Miguel Martin: We take great pride in Aurora being the global medical cannabis leader within nationally legal markets. These accomplishments in Q1 position us to have a record year at Aurora, led by our flagship global medical business. First, net revenue rose 12% compared to the same period last year, inclusive of 24% growth in international medical cannabis. Second, Adjusted Gross Margin was 43%, while Medical Cannabis Adjusted Gross Margin reached a record 69%. Third, adjusted EBIT grew 87%, and free cash flow was positive for the first time.

Speaker Change: We take great pride in Aurora being the global medical cannabis leader within nationally legal markets. This enables us to capitalize on a rapidly evolving opportunities in countries around the world.

Miguel Martin: And through our investment in Bebo two years ago, we have also become an important player within North America's controlled environment agricultural industry. This generates a steady, predictable financial performance on a seasonal cadence, and we foresee more value creation through an acceleration of Bebo's business plan. Turning back to Q1, we also generate substantial growth in adjusted EBITDA to a near record high and reach positive pre-cash flow six months earlier than we had projected, both incredible outcomes.

Speaker Change: And through our investment in vivo two years ago. We've also become an important player within North America is controlled environment agricultural industry.

Speaker Change: This generates a steady predictable financial performance on a seasonal cadence and we foresee more value creation through an acceleration of <unk> business plan.

Speaker Change: Turning back to Q1, we also generated substantial growth and adjusted EBITDA to a near record high and reached positive free cash flow six months earlier than we had projected broke incredible outcomes.

Miguel Martin: Note that our ability to maintain pre-cash flow is not linear, and as Simona will explain, we do not foresee reaching positive pre-cash flow in Q2, but expect to be positive again in the third quarter. We also maintain our balance sheet strength through a large cash balance and no debt on our cannabis business, which provides us with maximum flexibility. These accomplishments in Q1 position us to have a record year at Aurora led by our flagship global medical business.

Speaker Change: Note that our ability to maintain free cash flow was not linear Simona will explain we do not foresee reaching positive free cash flow in Q2, but expect to be positive again in the third quarter.

Speaker Change: We also maintained our balance sheet strength through a large cash balance and no debt on our canvas business, which provides us with maximum flexibility.

Speaker Change: These accomplishments in Q1 position us to have a record year at Aurora led by our flagship global medical business.

Miguel Martin: Let me now highlight some specific metrics related to our quarterly performance. First, net revenue rose 12%, compared to the same period last year, inclusive of 24% growth in international medical cannabis. Second, adjusted gross margin was 43%, while medical cannabis adjusted gross margin reached a record 69%. Third, adjusted EBITDA rose 87%, and pre-cash flow was positive for the first time. And finally, we held about $182 million in cash on our balance sheet and had no cannabis debt. Our prime positioning within global medical cannabis increasingly enables us to serve the diverse needs of patients globally. Our global medical business grew 13% year over year and delivered record margins.

Simona: Let me now highlight some specific metrics related to our quarterly performance.

First net revenue rose, 12% compared to the same period last year inclusive of 24% growth in international medical cannabis.

Adjusted gross margin was 43% while medical cannabis adjusted gross margin reached a record 69%.

Simona: Third adjusted EBITDA Rose, 87% and free cash flow was positive for the first time.

Miguel Martin: And finally, we held about $182 million in cash on our balance sheet and had no cannabis debt. Our prime positioning within global medical cannabis increasingly enables us to serve the diverse needs of patients globally. It generated 57% of our total revenue and 91% of our adjusted gross profit. Most of that growth stemmed from international markets.

Simona: And finally, we held about $182 million in cash on our balance sheet and had no cannabis debt.

Simona: Our prime positioning within global medical cannabis increasingly enables us to serve the diverse needs of patients globally.

Simona: Global medical business grew 13% year over year and delivered record margins.

Miguel Martin: It generated 57% of our total revenue in 91% of our adjusted gross profit. Most of that growth stem from international markets. We call also that medical cannabis has the highest gross margin of any segment within the cannabis industry. In Canada, we grew our medical cannabis market share while upholding our number one position. Revenue rose nearly 7% due to higher sales from both insurance-covered patients and self-paying patients. We not only appreciate our broad product assortment, but also the steady stream of exciting next generation cultivars. This consistent supply of innovative products is a direct result of our continued investment in science and innovation at our world-class breeding and genetic facility in Comox, British Columbia.

Simona: Generated 57% of our total revenue and 91% of our adjusted gross profit.

Simona: Most of that growth stem from international markets.

Miguel Martin: Recall also that medical cannabis has the highest gross margin of any segment within the cannabis industry. In Canada, we grew our medical cannabis market share while upholding our number one position. This consistent supply of innovative products is a direct result of our continued investment in science and innovation at our world-class breeding and genetics facility in Comox, British Columbia. We believe that constant innovation is an important element of why we have achieved and maintained our dominant position in our home market, and frankly, other global markets too.

Simona: Recall also that medical cannabis has the highest gross margin of any segment within the cannabis industry.

Simona: In Canada, we grew our medical cannabis market share, while upholding our number one position.

Revenue rose nearly 7% due to higher sales from both insurance covered patients and self paying patients who not only appreciate our broad product assortment, but also the steady stream of exciting next generation cultivars.

Speaker Change: This consistent supplier of innovative products as a direct result of our continued investment in science and innovation and our world class breeding and genetics facility in Comox British Columbia.

Miguel Martin: We believe that constant innovation is an important element of why we have achieved and maintained our dominant position in our home market and, frankly, other global markets too. Our primary focus with respect to the Canadian medical market is serving insured patients, a generally stable group, but we are also encouraged by increased interest from unions and other entities that are either already or at least considering adding medical cannabis as a member benefit. We think this development, coupled with the traditional medical establishment conducting more clinical trials on a regular basis, provides great upside to opening the addressable usage market, which currently encompasses only about 1% of the Canadian adult population.

Speaker Change: We believe that constant innovation is an important element of why we have achieved and maintained our dominant position in our home market and frankly other global markets too.

Miguel Martin: A primary focus with respect to the Canadian medical market is serving insured patients, a generally stable group, but we were also encouraged by increased interest from unions and other entities that are either already or at least considering adding medical cannabis as a member benefit. To capitalize on increased interest in medical cannabis as part of healthcare options made available to Canadians, last week, we announced a commercial collaboration with Vectora Ferdin Pharma, an innovator in wellness and healthcare, to launch a newly developed CBD lozenge on our leading Canadian medical cannabis platform.

Speaker Change: Our primary focus with respect to the Canadian medical market is serving insured patients are generally stable group, but we were also encouraged by increased interest from unions and other entities that are either already or at least considering adding medical cannabis as a member benefit.

Speaker Change: We think this development coupled with the traditional medical establishment conducting more clinical trials on a regular basis provides great upside to opening the addressable usage market, which currently in Congress is only about 1% of the Canadian adult population.

Miguel Martin: To capitalize on increased interest in medical cannabis, as part of healthcare options may be able to Canadians, last week we announced a commercial collaboration with Vectura Furt and Pharma, an innovator in wellness and healthcare, to launch a newly developed CBD loggins on our leading Canadian medical cannabis platform. Our intention through this launch, which requires minimal additional capital investment on our part, is to gather patient feedback, validate the product proposition, and build rural world patient data. Following the launch later this year, we expect to explore additional opportunities to commercialize other Vectura Furt and medical cannabis products.

Speaker Change: To capitalize on increased interest in medical cannabis is part of health care options made available to Canadians last week, we announced a commercial collaboration Victor referred in pharma and innovator in wellness and health care to launch a newly developed CBD logins on our leading Canadian medical cannabis platform.

Miguel Martin: Our intention through this launch, which requires minimal additional capital investment on our part, is to gather patient feedback, validate the product proposition, and build real-world patient data. Following the launch later this year, we expect to explore additional opportunities to commercialize other Victoria Furton medical cannabis products. During Q1, we generated a little over $9 million in revenue in Australia, up 67% from the year-ago period as we benefited from a full quarter contribution from our MedRelief Australia subsidiary, the number two player in the market.

Speaker Change: Our intention through this launch which requires minimal additional capital investment on our part is to gather patient feedback validate the product proposition and bill real World class patient data.

Speaker Change: Following the launch later this year, we expect to explore additional opportunities to commercialize other Victor a burden medical cannabis products.

Miguel Martin: Let's now turn to the Australian market, which is rapidly becoming the largest medical market in the world outside of North America. Estimated at $400 million Australian annually, Australia is our largest single market at Sweden, Canada. During Q1, we generate a little over 9 million in revenue in Australia, up 67% from the year-ago period, as we benefited from a full quarter contribution from our Med Relief Australia subsidiary, the number two player in the market. Med Relief Australia's product portfolio has broadened significantly, thanks to Aurora's innovation platform. Since the acquisition, we have become one of the first companies to offer both past deals and live resin cartridges in Australia.

Speaker Change: Let's now turn to the Australian market, which is rapidly becoming the largest medical market in the world outside of North America estimated a 400 million Australian dollars annually, Australia is our largest single market excluding Canada.

Speaker Change: During Q1, we generated a little over $9 million in revenue in Australia up 67% from the year ago period, as we benefited from a full quarter contribution from our Med relief Australia subsidiary the number two player in the market.

Miguel Martin: Medrelief Australia's product portfolio has broadened significantly thanks to Aurora's innovation platform. Aurora is actually one of the first Canadian LPs to receive good manufacturing practice certification from the Australian Regulatory Authority, TGA, for River and Ridge, our largest Canadian manufacturing facility. 90% of our annual production comes from these EU GMP and TGA GMP certified facilities, enabling us to pursue growth opportunities in Australia and other key global markets. All of Aurora's markets require EU or TGA GMP certification, so its network of close to 28 tons of GMP certified manufacturing capacity is a significant advantage over its competitors.

Speaker Change: Medical leave Australia's product portfolio has broadened significantly thanks to Aurora innovation platform.

Speaker Change: Since the acquisition, we've become one of the first companies to offer both past deals and live resin cartridges in Australia.

Miguel Martin: These breakthrough innovations are also being combined with an expanded range of high quality cultivars. As our reference to our last conference called, Australia's clinician-led product distribution model and high regulatory standards are significant barriers to entry, providing a distinct advantage for Aurora. Aurora is actually one of the first Canadian LPs to receive Good Manufacturing Practice certification from the Australian regulatory authority TGA for River and Ridge, our largest Canadian manufacturing facilities. 90% of our annual production comes from these EUGMP and TGAGMP certified facilities, enabling us to pursue growth opportunities in Australia and other key global markets. All of Aurora's markets require EU or TGAGMP certification, so Aurora's network of close to 28 tons of GMP certified manufacturing capacity is a significant advantage over our competitors.

Speaker Change: These breakthrough innovations are also being combined with expanded range of high quality cultivars.

Speaker Change: As I referenced in our last conference call, Australia is clinician led product distribution model and high regulatory standards are significant barriers to entry providing a distinct advantage for Aurora.

Speaker Change: ROE is actually one of the first Canadian Lps to receive good manufacturing practice certification from the Australian regulatory Authority T. G E for river enrich our largest Canadian manufacturing facilities.

Speaker Change: 90% of our annual production comes from these EU GMP and T. G. A GMP certified facilities.

Speaker Change: Neighboring us to pursue growth opportunities in Australia, and other key global markets.

Speaker Change: All of Aurora as markets require EU or T. G. A GMP certification. So roars network of close to 28 tons of GMP certified manufacturing capacity is a significant advantage over our competitors.

Miguel Martin: Turning to New Zealand, we celebrated our first shipment of Aurora-branded premium dried flowers during Q1. This was a significant milestone for medical cannabis accessibility, and we believe our leadership in Australia gives us an advantage in this emerging market.

Miguel Martin: Turning to New Zealand, we celebrated our first shipment of Aurora-branded premium dried flowers in Q1. This was a significant milestone for medical cannabis accessibility, and we believe our leadership in Australia gives us an advantage in this emerging market. They'll discuss our European operation. We are seeing more patients get prescriptions, including telemedicine, and this is beginning to positively impact volume. We'll be able to support increased volumes through our EU GMP Canadian facilities, but also through our EU GMP facility in Leune, Germany, which just recently was granted an expanded cultivation and unique research license under Germany's new medical cannabis act.

Speaker Change: Turning to New Zealand, we celebrated our first shipment of Aurora branded premium dried flowers during Q1.

Speaker Change: This was a significant milestone for medical cannabis accessibility and we believe our leadership in Australia. It gives us an advantage in this emerging market.

Miguel Martin: Let's now discuss our European operations. In Germany, a country that we've been operating in since 2018, our credentials are very strong. We hold the number two market share for flowers, the number one market share of cell pairs and have two of the top 10 cultivars by volume sales. While Germany is in the early stages of cannabis de-scheduling, and we do not know with certainty how quickly the market will grow, what we can say is that de-scheduling will continue to fuel the expansion of medical cannabis for some time, and that we expect these changes to benefit the cell pair segment the most, as it is the fact that it's growing channel.

Speaker Change: Let's now discuss our European operations in Germany, a country that we've been operating in since 2018, our credentials are very strong we hold the number two market share for flowers. The number one market share of a self payers and have two of the top 10 cultivars by volume sales.

Speaker Change: While Germany is in the early stages of canvas the scheduling and we do not know with certainty how quickly the market will grow well. We can say is that these scheduling will continue to fuel the expansion of medical cannabis for some time and then we expect these changes to benefit the self payer segment. The most as it is the fastest growing channel we.

Miguel Martin: We are seeing more patients kept prescriptions, including telemedicine, and this is beginning to positively impact volume. Williams. We'll be able to support increased volumes through our EUGNP Canadian facilities, but also through our EUGNP facility in Lwanda, Germany, which just recently was granted an expanded cultivation and unique research license under Germany's new Medical Cannabis Act. We are one of the select few companies to receive enhanced licenses, which review as a result of our commitment to high quality manufacturing practices and a testament to our long-established regulatory expertise and unparalleled commitment to compliance in Europe. Our leadership in Germany has an outsized influence on other emerging European markets, given the confidence and rigor we demonstrate to meet their high regulatory requirements.

Speaker Change: We are seeing more patients get prescriptions, including telemedicine and this is beginning to positively impact volumes.

Speaker Change: We will be able to support increased volumes through our EU GMP Canadian facilities, but also through our EU GMP facility and Lorna, Germany, which just recently was granted an expanded cultivation and unique research license under Germany's new medical Cannabis Act.

Miguel Martin: We are one of the select few companies to receive enhanced licenses, which we view as a result of our commitment to high-quality manufacturing practices. Let's now turn to Poland, our second largest European market. By doing so, we are best able to deliver ongoing and sustainable improvements to our financial performance.

Speaker Change: We are one of the select few companies to receive enhanced licenses, which we view as a result of our commitment to high quality manufacturing practices.

Speaker Change: And a testament to our long established regulatory expertise and unparalleled commitment to compliance in Europe.

Speaker Change: Our leadership in Germany has an outsized influence on other emerging European markets, given the confidence and rigor we demonstrate to meet their high regulatory requirements.

Miguel Martin: Moreover, the changes in Germany shape a broader effect on the expanding acceptance of medical cannabis and future modern frameworks across Europe, and we are poised to fulfill that growing patient demand through our expertise in developing novel, high quality, and innovative products.

Speaker Change: Moreover, the changes in Germany should have a broader effect on the expanding acceptance of medical cannabis and future modern frameworks across Europe, and we are poised to fulfill their growing patient demand through our expertise in developing novel high quality and innovative products.

Miguel Martin: This now turned to Poland, our second largest European market. Sales off in Q1 compared to the same period last year due to the import permit process, but we remain bullish on the long-term opportunity. In the UK and Switzerland, we are gaining traction with patients to rough proprietary cultivars and widen distribution channels, resulting in significant revenue growth in the UK and a record quarter in Switzerland.

Speaker Change: Let's now turn to Poland, our second largest European market sale.

Speaker Change: Sales softened in Q1 compared to the same period last year due to the import permit process, but we remain bullish on the long term opportunity in the U K and Switzerland, we are gaining traction with patients through our proprietary cultivars and widened distribution channels, resulting in significant revenue growth in the U K and a record quarter in Switzerland.

Miguel Martin: And so, our plan for fiscal 2025 is to thoughtfully execute our medical first cannabis strategy and build on what was accomplished in Q1 and the previous year as the leader in global medical markets. By doing so, we are best able to deliver ongoing and sustainable improvements to our financial performance.

Speaker Change: And so our plan for fiscal 2025 is the thoughtfully execute our medical first cannabis strategy and build on what was accomplished in Q1 and the previous year as the leader in global Medical My Global medical markets by doing so we are best able to deliver ongoing and sustainable improvements drove financial performance.

Simona King: I would now like to turn the call over to Simona for a detailed financial overview. Thank you, Miguel, and good morning, everyone. Q1 is certainly indicative of how we are fulfilling the mission that Miguel laid out, as I will now discuss in detail. Revenue of 83.4 million, reconcentred, 12% growth versus the year-ago period, and included a 47.2 million contribution from our high-margin medical cannabis segment. Quarterly profitability consists of consolidated adjusted growth margin at 43%, resulting in adjusted growth profit of 36 million compared to 32.6 million in the year-ago period. Medical cannabis comprises 57% of total net revenue and 91% of total adjusted growth profit during the quarter.

Speaker Change: Now I'd like to turn the call over to Simona for a detailed financial overview.

Simona King: Thank you, Miguel. And good morning, everyone.

Simona: Thank you Miguel and good morning, everyone.

Simona: Q1 is certainly indicative of how we are fulfilling the mission that Miguel laid out and that will now discuss in detail.

Simona King: Q1 is certainly indicative of how we are fulfilling the mission that Miguel laid out, as I will now discuss in detail. Revenue of $83.4 million represented 12% growth versus the year-ago period and included a $47.2 million contribution from our high-margin medical cannabis segment. Quarterly profitability consisted of consolidated adjusted growth margin of 43%, resulting in adjusted growth profit of $36 million compared to $32.6 million in the year-ago period. This marks an increase from 56% of net revenue and 77% of adjusted gross profit from the year-ago period, reflecting higher medical margins in the current quarter.

Simona: Revenue of $83 4 million, representing 12% growth versus the year ago period and included a $47 2 million contribution from our high margin medical cannabis segment.

Speaker Change: Quarterly profitability consisted of consolidated adjusted gross margin at 43%, resulting in adjusted gross profit of 36 million compared to $32 6 million in the year ago period.

Speaker Change: Medical cannabis comprise 57% of total net revenue and 91% of total adjusted gross profit during the quarter.

Simona King: This marks an increase from 56% of net revenue and 77% for adjusted growth profit from the year-ago period, reflecting higher medical margins in the current year quarter. Adjusted EBITDA was 4.9 million for the quarter, resulting in our seventh consecutive quarter of positive adjusted EBITDA, and grew 87% compared to the year-ago period. Let's now discuss the results in more detail. Medical cannabis net revenue rose by 13% to 47.2 million, which consisted of nearly 7% growth in the Canadian medical cannabis and more than 24% growth in international medical cannabis. The increase in Canadian medical revenue was due to increased sales to both insurance-covered and self-paying patients.

Speaker Change: This marked an increase from 56% of net revenue and 77 for adjusted gross profit from the year ago period, reflecting higher medical margins in the current year quarter.

Speaker Change: Adjusted EBITDA was $4 9 million for the quarter, resulting in our stomach consecutive quarter of positive adjusted EBITDA and grew 87% compared to the year ago period.

Speaker Change: Let's now discuss our results in more detail.

Speaker Change: Medical cannabis net revenue rose by 13% to $47 2 million, which consisted of nearly 7% growth in the Canadian medical cannabis and more than 24% growth in international medical candidate.

Simona King: The increase in Canadian medical cannabis revenue was due to increased sales to both insurance-covered and self-paying patients. The increase in international medical cannabis revenue was primarily due to higher sales in Australia and Germany, driven by significant overall growth in those markets, as well as increased distribution in the UK. First, sustainable cost reduction.

Speaker Change: The increase in Canadian medical revenue was due to increased Dallas to both insurance covered and self paying patients.

Simona King: The increase in international medical cannabis revenue was primarily due to higher sales in Australia and Germany, driven by significant overall growth in those markets, as well as increased distribution in the UK. Adjusted growth margin for medical cannabis was 69%, up from 61% in the year-ago period. This was the highest margin we have ever generated, far exceeding our 60% target and the result of several factors. First, sustainable cost reduction; second, higher selling prices in Australia, which represents a growing component of our international business; and third, improved efficiency in our production operations with our shift to supplying the European markets from Canada.

Speaker Change: The increase in international medical cannabis revenue was primarily due to higher sales in Australia, and Germany, driven by significant overall growth in those markets as well as increased distribution in the U K.

Speaker Change: Adjusted gross margin for medical cannabis was 69% up from 61% in the year ago period.

Speaker Change: This was the highest margin we have ever generated far exceeding our 60% target and the result of several factors.

Speaker Change: Alright.

Speaker Change: Stena bulk cost reduction second higher selling prices in Australia, which represent a growing component of our international business.

Simona King: Second, higher selling prices in Australia, which represents a growing component of our international business. And third, improved efficiency in our production operations with our shift to supplying the European markets from Canada. Consumer cannabis net revenue was $11.5 million, down from $12.8 million a year ago. Adjusted gross margin for consumer. Adjusted growth margin for consumer cannabis was 24%, compared to 26% in the prior year period, due to sales of higher-margin products a year ago.

Speaker Change: And third improved efficiency in our production operations with our stretch just applying that European markets from Canada.

Simona King: Going forward, we do expect quarterly variability in our adjusted growth margin due to seasonality and changes to geographic sales mix, but we still are confident that we can consistently meet or exceed a 60% or greater margin. Consumer cannabis net revenue was 11.5 million, down from 12.8 million a year ago. The decline was to expect the result of our decision to prioritize the supply of our GNP manufacturer products to our high margin international business. Adjusted growth margin for consumer. Adjusted growth margin for consumer cannabis was 24%, compared to 26% in the prior year period due to sales of higher-margin products a year ago.

Speaker Change: Going forward, we do expect quarterly variability in our adjusted gross margin due to seasonality and changes to geographic mix.

Speaker Change: We still are confident that we can consistently meet our meet or exceed a 60% or greater margin.

Speaker Change: Consumer cannabis net revenue was $11 5 million down from $12 8 million a year right down the.

Speaker Change: The decline was the expected result of our decision to prioritize the supply of our GMP manufacture product to our high margin International business.

Speaker Change: Adjusted gross margin for consumer.

Speaker Change: Adjusted gross margin for our consumer cannabis was 24% compared to 26% in the prior year period did yourselves up higher margin product a year ago.

Simona King: Plant propagation net revenue was 23.1 million, up from 19.9 million in the year-ago period due to a combination of organic growth and assisted revenue from the most recent order due to seasonality. You will recall that Beavill delivers higher revenue in the late winter and spring months. Plant propagation adjusted growth margin was 18%, down from 22% in the year-ago period due to changes in product mix and the prolonged growing season the spring. Our consolidated adjusted SGMA rose to 31.4 million, up from 29 million last year due to the incremental SGMA following that position and full ownership of Med Relief Australia.

Simona King: Plant propagation net revenue was $23.1 million, up from $19.9 million in the year-ago period due to a combination of organic growth and a shift in revenue from the most recent quarter due to seasonality. Plant propagation's adjusted growth margin was 18%, down from 22% in the year-ago period, due to changes in product mix and the prolonged growing season this spring.

Speaker Change: Glenn propagation net revenue was $23 1 million up from $19 9 million in the year ago period due to a combination of organic growth and the shift in revenues from the most recent quarter <unk> seasonality.

Speaker Change: You will recall that diebold delivered higher revenue in the late winter and spring months.

Speaker Change: Glen propagation adjusted gross margin was 18% down from 22% in the year adult period due to changes in product mix and the prolonged growing season. This spring.

Speaker Change: Our consolidated adjusted SG&A Rose to 31 4 million up from 29 million last year due to the incremental SG&A following the acquisition and full ownership of Med relief Australia.

Simona King: This additional expense is now being opted by increased revenue and EBITDA contribution, and we expect to see the full incremental benefit in Q2. Now let's turn to our balance sheet, which remains one of the strongest in the global cannabis industry. We held approximately 182 million in cash and cash equivalent as of June 30th. Recall that our cannabis operations are completely debt-free, while our Beavill business holds 52.4 million in non-recourse debt. Net cash provided by operating activities was 8.9 million, a remarkable turnaround from last quarter when net cash used was 20.4 million. The improvement was due to both increased revenue, an improved contribution margin, and changes in working capital.

Speaker Change: This additional expense is now being offset by increased revenue and EBITDA contribution and we expect to see the full incremental benefit in Q2.

Speaker Change: Now, let's turn to our balance sheet, which remains one of the strongest in the global cannabis industry.

Speaker Change: We held approximately $182 million in cash and cash equivalents as of June 30th.

Simona King: Recall that our cannabis operations are completely debt-free, while our Bepo business holds $62.4 million in non-recourse debt. Net cash provided by operating activities was $8.9 million, a remarkable turnaround from last quarter when net cash used was $20.4 million. The improvement was due to both increased revenue, an improved contribution margin, and changes in working capital, with free cash flow of $6.5 million. Finally, let me now provide some thoughts on Q2 and Q3.

Speaker Change: We call that our cannabis operations are completely debt free while our depot business towards $52 4 million in non recourse debt.

Speaker Change: Net cash provided by operating activities was $8 9 million a remarkable turnaround from last quarter when net cash used about $24 million.

Speaker Change: The improvement was due to both increased revenue and improved contribution margin and changes in working capital.

Simona King: This resulted in us reaching our free cash flow goal to quarter the head of our original projection with free cash flow of 6.5 million.

Speaker Change: This resulted in us reaching our free cash flow goal two quarters ahead of our original projection, which kicked like free cash flow of $6 5 million.

Simona King: Finally, let me now provide some thoughts on Q2 and Q3. We expect to see continued strong net revenue and adjusted gross margins across its cannabis business, supported by net revenue growth in Europe and Australia. For plant propagation, we expect to see seasonally reduced revenues and gross profit in Q2 that will be in line with historical performance as 25 to 35% of revenues are normally earned in the second half of a calendar year. Positive adjusted EBDA is expected to continue, while our free cash flow is anticipated to be impacted negatively by several significant annual and one-time cash payments that typically occur in Q2.

Speaker Change: Finally, let me now provide some thoughts on Q2 and Q3.

Simona King: We expect to see continued strong net revenue and adjusted growth margins across its cannabis business, supported by net revenue growth in Europe and Australia. Positive adjusted EBITDA is expected to continue, while our free cash flow is anticipated to be impacted negatively by several significant annual and one-time cash payments that typically occur in Q2. We will continue to target improvements in operating cash use, and we expect to generate positive free cash flow in Q3 based on the following.

Speaker Change: We expect to see continued strong net revenue and adjusted gross margins across its cannabis business.

Speaker Change: <unk> by net revenue growth in Europe and Australia.

Speaker Change: So our plant propagation, we expect to see seasonally reduced revenues and gross profit in Q2 that will be in line with historical performance at 25% to 35% of revenues are normally earned in the second half of the calendar year.

Speaker Change: Positive adjusted EBITDA is expected to continue while our free cash flow is anticipated to be impacted negatively by several significant annual and onetime cash payments that typically occur in Q2.

Simona King: We will continue to target improvements to operating cash use, and we expect to generate positively cash flow in Q3 based upon the following. First, continued increases in global medical cannabis driven in part by the full recognition of revenue in Australia and further growth in our key European market. Second, operating expenditure and adjusted gross margins in line with previously stated targets, leading to continued strong positive adjusted EBDA. And finally, discipline working capital management and maintenance capital expenditure of approximately 2 million per quarter.

Speaker Change: We will continue to target improvements to operating costs.

Speaker Change: And we expect to generate positive free cash flow in Q3 based upon the following.

First continued increases in global medical Canada, driven in part by the full recognition of revenue in Australia and further growth in our key European European market.

Simona King: Second, operating expenditure and adjusted growth margins in line with previously stated targets, leading to continued strong positive adjusted EBITDA. And finally, disciplined working capital management and maintenance capital expenditure of approximately $2 million per quarter. We are giving our full attention to executing our expansion strategy across key markets and combining that with operational excellence to further strengthen our financial condition. Thank you for your time. I'll now turn the call back to Miguel.

Speaker Change: Second operating expenditure in adjusted gross margins in line with previously stated targets leading to continued strong positive adjusted EBITDA.

Speaker Change: And finally disciplined working capital management and maintenance capital expenditure of approximately 2 million per quarter.

Simona King: To conclude, we are very pleased with our performance in our first quarter and believe that we have set the foundation for a strong fiscal 2025. We are giving our full attention to executing our expansion strategy across key markets and combining that with operational excellence to further strengthen our financial condition.

Speaker Change: To conclude we are very pleased with our performance in our first quarter and believe that we have set the foundation for a strong fiscal 2025.

Speaker Change: We are giving our full attention to executing our expansion strategy across key markets and combining that with operational excellence to further strengthen our financial condition.

Simona King: Thank you for your time.

Macau: Thank you for your time I'll now turn the call back to Macau.

Miguel Martin: I'll now turn the call back to Miguel. Thank you, Simona. Aurora is firmly in growth mode, ready and able to capitalize on the opportunity for global medical cannabis, the most attractive segment of our industry as patient access is increasing at a rate like never before. The opening is provided by evolving regulatory environments in key international markets, positions just a few companies like Aurora to take advantage of this once-in-a-generation opportunity. As we expand and deepen our presence in these markets, we will not only benefit from an increase in our top line, but also from the high margin contribution that flows from the medical cannabis segment.

Macau: Thank you Simona.

Speaker Change: <unk> is firmly in growth mode ready enable to capitalize on the opportunity for global medical cannabis. The most attractive segment of our industry is patient access is increasing at a rate like never before.

Miguel Martin: The openings provided by evolving regulatory environments in key international markets position just a few companies, like Aurora, to take advantage of this once-in-a-generation opportunity.

Speaker Change: The openings provided by evolving regulatory environments in key international markets positions, just a few companies like Aurora to take advantage of this once in a generation opportunity.

Speaker Change: As we expand and deepen our presence in these markets will not only benefit from an increase in our top line, but also from the high margin contribution that flows from the medical cannabis segment. This will result in long term EBITDA and free cash flow growth for the benefit of our shareholders and with that thank you for your interest in Aurora and we will now take your.

Miguel Martin: This will result in long-term EBDA and pre-cashable growth for the benefit of our shareholders. And with that, thank you for your interest in Aurora, and we will now take your questions.

Operator: Operator, please open the lines.

Speaker Change: Operator, please open the lines.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your questions.

Speaker Change: We will now begin the question and answer session to ask a question you May press star.

Speaker Change: And one on your telephone keypad.

Operator: If you are using a speakerphone, please pick up your handset. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. Once again, it is more than one to ask a question. Please limit yourself to one question and no follow-up. If you wish to ask a follow-up, please rejoin the question queue. At this time, we will pause momentarily to assemble our roster. Our first question comes from Pablo Zuanic of Zuanic and Associates.

Speaker Change: If youre using a speakerphone please pick up your handset.

Speaker Change: Before pressing the keys.

Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please.

Operator: Question. Please press star, then two. Once again, it is star than one to ask a question. Please limit yourself to one question and no follow-ups. If you wish to ask a follow-up, please rejoin the question queue.

Speaker Change: Please press Star then two.

Speaker Change: Once again it is star then one to ask a question.

Speaker Change: Please limit yourself to one question and no follow ups.

Speaker Change: If you wish to ask a follow up please rejoin the question queue.

Operator: At this time, we will pause momentarily to assemble our roster.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Pablo Zuanic: The first question comes from Pablo Zuanic with Zuanic and Associates. Please go ahead.

The first question comes from Pablo <unk> with Walnuts and associates. Please go ahead.

Pablo Zuanic: Good morning Miguel. Can we just discuss Germany? If you can just, it's a two-part question. First, if you can give some sense of underlying trends, right? Some people have talked about growth from April to July. You know, local companies there have talked about doubling or tripling in doctor visits, and scripts. Any color you can give about underlying trends would help. And the second part of the question is to really remind us of the strength of your franchise in Germany, because from outside, sometimes we wonder about the barriers to entry. There seems to be a lot of companies there, wholesalers, importers.

Pablo Zuanic: Good morning, Miguel. Can we just discuss Germany? If you can just, it's a two-bar question. First, if you can give some sense of underlying trends, right? Like some people have talked about growth from April to July, you know, local companies there have talked about doubling or tripling in doctor visits, scripts. Any color you can give about underlying trends would help. And the second part to a question is really to remind us of the strength of your franchise in Germany because, from outside, sometimes we wondered about the barriers to entry. There seems to be a lot of companies there, wholesalers, importers.

Pablo: Good morning, Neil can we just discuss Germany. If you can just it's a two part question first if you can give some sense of underlying trends right like some people have talked about growth from April to July.

Speaker Change: Local companies they don't have to talk about doubling or tripling and doctor visits scripts any color you can queue about underlying trends are withheld.

Speaker Change: On the second part of your question is really remind us of the strengths of your franchise in Germany, because I'm outside sometimes we wonder about the barriers to entry are there seems to be a lot of companies are wholesalers importers.

Miguel Martin: So just remind us of the strength of your franchise and one which why we should assume that you will continue to benefit from strong market share there. Thanks. Great. Well, thanks. And good morning, Pablo. Appreciate it.

Speaker Change: So just remind us with the strength of your franchise on one wish why are we should we assume that you would continue to benefit from strong market share there great.

Miguel Martin: Great. Well, thanks and good morning, Pablo. I appreciate it.

Miguel Martin: So just remind us of the strength of your franchise and why we should assume that you will continue to benefit from a strong market share there. Thanks. Great. Well, thanks and good morning, Pablo. I appreciate it.

Speaker Change: Great well, thanks, and good morning, Pablo appreciate it so.

Miguel Martin: So, you know, when we look at Germany and you look at the Palsing and the Cannabis Act, which took effect on April 1st, you know, really there were sort of three aspects of it that, you know, were encouraged by. First has been the increased access to patients, the ease in which patients can get a prescription through, you know, a variety of means, say telemedicine and others. And so it has dramatically grown the sort of the overall pie of available patients and the ease in which that process is, say, you know, compared to what it used to be.

Speaker Change: So when we look at Germany, and you look at the passing of the Cannabis Act, which took effect in April 1st really three aspects of it that we're encouraged by first has been the increased access to patients the ease in which patients.

Miguel Martin: So, you know, when we look at Germany and you look at the passing of the Cannabis Act, which took effect on April 1st, you know, really, there were sort of three aspects of it that, you know, we're encouraged by. First, there has been increased access to patients, the ease with which patients can get a prescription through, you know, a variety of means, say, telemedicine and others. And so it has dramatically grown the sort of the overall pie of available patients and the ease in which that process is, say, you know, compared to what it used to be. Secondly, as you're well aware of,

Speaker Change: Can get a prescription through a variety of means say telemedicine and others and so it was dramatically grown.

Speaker Change: Sort of the overall pie of available patients and the ease in which.

Speaker Change: That process is let's say compared to what it used to be secondly, as you're well aware of.

Miguel Martin: Secondly, as you're well aware of the ease of distribution there, because now you can shift cannabis products like other pharmaceutical products through the mail, which, you know, allows an expansion beyond what was the traditional, you know, face-to-face interaction that you would see at a pharmacy. And then third is we have not seen margin or pricing compression. And the reason for that is that the wholesale list price of the manufacturer drives the economics for both. The wholesaler and the retailer, which in this case is the pharmacy.

Miguel Martin: The EZ-EV distribution there because now you can ship cannabis products, like other pharmaceutical products, through the mail, which allows an expansion beyond what was the traditional face-to-face interaction that you would see at a pharmacy. And then third, we have not seen margin or pricing compression, and the reason for that is that the wholesale list price of the manufacturer drives the economics for both the wholesaler and the retailer, which in this case is the pharmacy.

Speaker Change: The ease of distribution there because now you can ship cannabis products like other pharmaceutical products through the mail, which you know allows.

Speaker Change: Is it an expansion beyond what was the traditional face to face interaction that you would see at a pharmacy.

Speaker Change: And then third is we have not seen a margin or pricing compression and the reason for that is that the wholesale list price of the manufacturer drives the economics for both the wholesaler and the retailer which in this case is the pharmacy, so now as to projections of.

Miguel Martin: So now, as to, you know, projections of two X or three X of the German market, I think, you know, that is a bit premature. You know, I think roughly 30% on an annualized basis is still very healthy, but we'll have to see given, you know, the overall sort of recency of that and the trends that we're going to see not only in the registrations, but in the overall sort of pharmacies and what's happening with the actual prescriptions themselves.

Miguel Martin: So now as to, you know, projections of a 2X or 3X growth of the German market, I think, you know, that is a bit premature. You know, I think roughly 30% on an annualized basis is still very healthy, but we'll have to see given, you know, the overall sort of recency of that and the trends that we're going to see not only in the registrations but in the overall number of pharmacies and what's happening with the actual prescriptions themselves.

Speaker Change: <unk> three <unk> of the German market I think you know that is a bit premature.

Speaker Change: Roughly 30% on an annualized basis is still very healthy, but we'll have to see given the overall sort of recency of that and the trends that we're going to see not only in the registrations, but in the overall sort of pharmacies and what's happening with the actual prescriptions themselves.

Miguel Martin: I think, you know, in terms of, you know, what are the strengths for Aurora? You know, what people I think need to understand is that medical cannabis operates like, you know, traditional pharmaceutical product. You have a clinician or a doctor prescribing a specific product for a need of a specific patient. And once they find a medication that they like, they, you know, they stick with it. And so unlike, say, you know, the rack market in Canada where you see great swings in market shares, once you've established a presence with innovative, you know, and, you know, well-made products, they're going to be sticky, so to speak.

Miguel Martin: I think, you know, in terms of, you know, what are the strengths of Aurora, you know, what people, I think, need to understand is that medical cannabis operates like, you know, traditional pharmaceutical products. You have a clinician or a doctor prescribing a specific product for a need of a specific patient. And once they find a medication that they like, they, you know, stick with it.

Speaker Change: I think you know in terms of you know what are the strengths for Aurora.

Speaker Change: People need to understand is that medical cannabis operators like traditional pharmaceutical product you have a clinician or a doctor prescribing a specific product or a need of a specific patient and once they find the medication that they like they they stick with it and so unlike say the rec market.

Miguel Martin: And so, unlike, say, the rack market in Canada where you see great swings in market shares, once you've established a presence with innovative, you know, and, you know, well-made products, they're going to be sticky, so to speak. So that's the first thing. The second thing is that the registration process for new products, and the testing protocols in Germany are incredibly stringent. So, as an example, you have to be within 10% of their testing of your potency and, you know, on some of the other key TERP scores. And so that's very hard to do with an agricultural product.

Speaker Change: In Canada, where you see great swings in market shares once you have established a presence with innovative.

Speaker Change: And you know well made products, they're going to be sticky so to speak. So that's the first thing. The second thing is that the registration process for new products.

Miguel Martin: So that's the first thing. The second thing is that the registration process for new products. and the testing protocols in Germany are incredibly stringent. So, as an example, you have to be within 10% of their testing of your potency and, you know, on some of the other key turp scores. And so that's very hard to do with an agricultural product. So precision in your manufacturing process beyond the EUGNP standards that you have to have there for a company like Aurora that's been doing it for such a long time is a significant advantage. Now in market, having infrastructure around wholesalers and distribution and connectivity to those pharmacists is something that takes a while and takes investment and is something that, you know, Aurora has and I think does well.

Speaker Change: And the testing protocols in Germany is incredibly stringent.

Speaker Change: As an example, you have to be within 10% of their testing of your potency and.

Speaker Change: Some of the other key TERP scores and so that's very hard to do with an agricultural products of precision in your manufacturing process beyond the EOG M. P standards that you have to have there for a company like Aurora that's been doing it for such a long time is a significant advantage now in market, having infrastructure around wholesalers and distribute.

Miguel Martin: So precision in your manufacturing process beyond the EOGMP standards that you have to have there for a company like Aurora that's been doing it for such a long time is a, you know, significant advantage. Now in the market, having infrastructure around wholesalers and distribution and connectivity to those pharmacists is something that takes a while and takes investment and is something that, you know, Aurora has and I think does well. And then lastly, as you also know, we're one of only three companies that have in-country manufacturing. And so the connectivity of not only selling products made from offshore into Germany but also growing them and potentially selling them in the market are all significant advantages in such a key market.

Speaker Change: <unk> and connectivity to those pharmacists is something that takes a while it takes investment and is something that you know Aurora is in and I think it does well and then lastly, as you also know we're one of only three companies that are in country manufacturing and so the connectivity of not only selling products made from offshore into.

Miguel Martin: And then lastly, as you also know, we're one of only three companies that have in-country manufacturing. And so the connectivity of not only selling products made from offshore into Germany, but also growing them and potentially selling them in market, all are significant advantages in such a key market.

Speaker Change: Jeremy, but also growing them and potentially selling them in market all our significant advantages in such a key market.

Miguel Martin: Thank you. Thank you very much. Thank you.

Pablo Zuanic: Thank you. Very welcome.

Jeremy: Thank you.

Jeremy: Very welcome.

Operator: Once again, if you have a question, please press star, then one.

Jeremy: Once again, thank you.

You have a question. Please press Star then one.

Operator: This concludes our question and answer session.

Jeremy: This concludes our question and answer session I would like to turn the conference back over to Miguel Martin for any closing remarks.

Miguel Martin: I would like to turn the conference back over to Miguel Martin for any closing remarks. Thank you very much, and we appreciate everybody's interest in Aurora. As we said, this was a milestone in quarter, and we're incredibly excited about the future. And we look forward to sharing those results with you as the year goes along.

Miguel Martin: Thank you very much, and we appreciate everybody's interest in Aurora. As we said, this was a milestone quarter, and we're incredibly excited about their future, and we look forward to sharing those results with you as the year goes along. All the best. Thank you very much.

Miguel Martin: Thank you very much and listen we appreciate everybody's interest in Aurora as we said this was a milestone quarter and we're incredibly excited about the future and we look forward to sharing those results with you as the year goes along all the best Thank you very much.

Miguel Martin: All the best. Thank you very much.

Operator: The conference has now concluded. Thank you for attending today's presentation.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: You may now disconnect.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yeah.