Good morning, everyone. And welcome to the Aurora Cannabis First Quarter Fiscal 2021 Conference Call for the three months ending September 30, 2020. This call is being recorded today, Monday, November 9, 2020. Listeners are reminded that certain matters discussed in today’s conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to the risks and uncertainties related to Aurora’s future financial or business performance. Actual results could differ materially from those anticipated in the forward-looking statements. The risk factors that may affect results are detailed in Aurora’s annual information form and other periodic filings and registration statements. These documents may be accessed via the SEDAR and EDGAR databases. Since we are conducting today’s call from our respective remote locations there may be brief delays, cross-talk, or other minor technical issues during this call. We thank you in advance for your patience and understanding. I would now like to introduce Mr. Miguel Martin, Chief Executive Officer for Aurora Cannabis. Please go ahead, Mr. Martin.

Thank you, Operator, and good morning, everyone, and thank you for your interest in Aurora. Since being appointed CEO in late September, I have established the tactical plans to succeed and I have been working with our team on executing these plans. We intend to demonstrate that Aurora can be a profitable growth-oriented leader in the global cannabinoid market. I would therefore like to spend our time today discussing the execution steps we are making in our business as well as our go-forward strategy. But first, let me comment briefly on the recent quarter. Q1 can best be characterized as a transitional period. While there remains a significant opportunity available to Aurora in the Canadian consumer segment, the other legs of our business are performing well. We remain the leader in the high-margin Canadian medical market and our international medical business saw 41% net revenue growth this quarter. Our CBD brand, Reliva, is the number one ranked brand by Nielsen in the U.S. CBD sector. Most importantly, our platform provides us with significant optionality in the CBD market, as I will explain later. As you can see from our earnings release, our quarterly results were generally in line with our previous expectations with cannabis net revenues of $67.8 million and an adjusted gross margin of 52%, excluding ramp-up costs at Nordic. SG&A, excluding restructuring items, was $43 million, which was consistent with our run rate target of the low $40 million range. Finally, as it relates to Q1, we demonstrated progress with respect to narrowing our adjusted EBITDA loss to $10.5 million. This marked the third consecutive quarter of adjusted EBITDA trending towards breakeven. As you know, as part of our business transformation plan, we have made some very tough decisions and done a lot of hard work over the past year with respect to rightsizing our cost structure. This includes taking the largest cut to G&A of any Canadian LP. For context, we cut quarterly SG&A from $100 million to approximately $43 million per quarter and sharply reduced our CapEx. Under my leadership, we will continue our focus on fiscal prudence. I can say without hesitation that our entire company is in a different mindset now than we were previously, and I have empowered all levels of the company to look for opportunities for profitable growth and further cost efficiencies. For example, we have demonstrated the capacity to make difficult financial decisions, such as in June when we were one of the first cannabis companies to take the step to write down our inventory and re-cost our trim. I also think we have a real opportunity to better align production costs with sales and shift costs from fixed to variable. In doing so, we will manage our working capital investment more effectively so that we can reach cash flow positive generation more quickly. This longer-term cash flow objective goes beyond simply reaching positive adjusted EBITDA. Our expectation for the second quarter demonstrates our leadership in differentiating Aurora and setting the standard for building a value-creating global cannabis company. Back in June, we announced the closure of five cultivation facilities across our network, and I can confirm that a few of those facilities are now shuttered. But aligning production costs with sales encompasses more than that. Specifically, our Aurora Nordic 1 facility, which is a new EU GMP certified production facility located in Denmark, will allow us to more efficiently distribute products in Europe and around the world and better allocate production here in Canada. Before I discuss the performance of our business segments, and in particular, our Canadian consumer segment, let me briefly address our recent capital raise under the ATM. The $280 million that we raised recently through our previous ATM was a responsible decision in today’s challenging environment. The cash will ensure that we have the runway needed to complete the remaining elements of our transformation plan, execute our tactical plans to regain market share in the Canadian consumer business, and be positioned for the rapidly changing global cannabinoid market. We appreciate that cannabis companies are being evaluated with respect to their business performance and their liquidity. And we wanted to ensure that we are addressing both sides of this equation without any perceived concerns regarding liquidity. We now have a much stronger balance sheet that makes it possible for us to act opportunistically and allows investors to focus on our business execution. In fact, as I said earlier, we are squarely focused on generating operating cash flow as quickly as possible. And of course, as a matter of good governance, we have also filed a new shelf prospectus. This is a common step for most large companies to have available, if needed. Now let’s discuss our business itself beginning with the Canadian consumer market where we have much work to do to gain share but also a strong sense of urgency to continue executing our well-thought-out tactical plans. As you know, there are two things to consider that are working in our favor; providing us with considerable tailwinds. First, the category is growing, with StatsCan data showing 11% month-over-month growth in July and another 5% in August, and more stores continue to open, particularly in the province of Ontario, which is very encouraging news. In fact, from the national data that we have seen, the current store count is approximately 1,200 and can reach 1,300 by December. And second, consumers have demonstrated very dynamic tendencies with market share moving very quickly between brands, unlike in more stable consumer packaged goods categories. This provides us with a great opening for our pivot to premium brands. These factors suggest to us that with the right accountabilities and focus, the right products, the right sales execution, including product availability, visibility, packaging, and better engagement with the provinces, we can gain share in key growth categories quickly, all while achieving profitability. The data from Canada and other mature markets indicate that premium and super-premium brands have been and will continue to be successful in all formats. Therefore, Aurora has a real opportunity for a more articulated and balanced portfolio offering, with a greater focus on higher margin and sustainable premium assets, such as vapes, pre-rolls, and premium flower offerings across multiple price tiers. For example, gummies is a format where we have a number one position, and we are allocating additional resources so that we can enhance and grow that format. We are also working to expand our lead in concentrates and to refocus our dried flower business toward higher gross profit dollar pools. Of course, premium segments must also be supported with classic CPG sales, marketing, trade marketing, and consumer engagement methodologies to build awareness, foster affinity, and generate outsized returns. The key, of course, is to ensure that in doing so we are delivering more dollars to the gross profit line versus simply delivering low-margin revenue. We are therefore much more interested in our market share within premium and super-premium categories, along with our market share of categories, such as vapor, pre-rolls, and concentrates that are margin accretive compared to our market share in the deep discount flower business. While it’s still early days, I am happy to say that we are starting to see some green shoots from these initiatives and suggest that you keep tabs on the headset data and other market data so that you can gauge our ongoing performance. For example, we are very encouraged by the great response to Phase 1 of our vapes launch that recently hit the market. We are also seeing strong demand from our Ace’s pre-roll, and they are currently working through some supply constraints. I would hope that those issues get resolved soon, so that we can have broader distribution in that key product category. Let me also say that with pre-rolls, there’s a lot of opportunity to bring classic CPG elements in packaging and alignment that traditional flower does not lend itself to. We have accelerated our focus on our premium brands, Aurora and San Raf, as well as the super-premium brand Whistler. These are tremendous assets that balance out the total offering to our consumers. Our intention is to build an ecosystem around each of them through various formats to foster greater brand visibility and provide greater choices for consumers where they can work up the value chain. For example, we are working to extend these brands to include San Raf pre-rolls and a higher quality Whistler vape. Through all of these initiatives, our intention is to generate not just revenue but quality revenue that will deliver a healthy gross profit dollar as opposed to essentially just a gross margin percentage. Whistler, for example, currently delivers 10 times the gross profit dollars per gram compared to the discount brand. So our path forward in putting more dollars at the bottom line is based on the notion that not all revenue dollars are created equal. On a related note, while we continue to support our Daily Special brand, we think the value segment may provide an opportunity to shift production and manufacturing costs to a more variable model, and we are exploring that opportunity. This variable model could also allow us to better control inventory build. In my 20 plus years of working with products and dynamic categories, I have seen many examples of there being an advantage to having more flexibility with a variable cost model. Now, let me turn your attention to our domestic and international medical businesses, which are operating well and delivered a 4% revenue increase over the last quarter. While our Canadian medical revenue declined slightly over the prior quarter, this segment is an evolving landscape and we are extremely happy with our ability to manage that business. We have moved our patient intake and experience online and can now offer substantially more choices to our patients and veterans as a result. While the medical channel over time may see some migration to the consumer channel, we see opportunities to retain and grow key patient groups, like veterans, to continue to grow the medical market. Our international medical segment has been a consistent performer and reported a 41% increase in Q1. We are already one of the leading providers of flower in Germany, and we continue to see opportunities in the oil market. We also just cleared an important regulatory milestone for the Aurora Nordic 1 production facility in Denmark, which just achieved GMP certification and its sales license for flower and oil. This facility is now able to shift from Denmark to Germany, as well as the rest of the EU and other parts of the world. There is certainly a great lesson here from our success to date in the global medical market that has positive implications for other opportunities, namely that it takes a lot of investment, a lot of compliance expertise and a lot of thought to be successful with the high standards that these international markets require. But once those capabilities are built out, they become very portable. We are bullish on the long-term international market opportunity and believe that Aurora, with our demonstrated expertise and medical market leadership, is very well positioned to continue to generate enduring shareholder value from international business as these markets develop. Lastly, our Nielsen top-ranked U.S. CBD brand Reliva remains an enviable strategic platform, despite the temporary slow growth due to COVID. Our platform already provides us with critical distribution and regulatory expertise and relationships, both advantages as the U.S. market continues to evolve. Reliva focuses on brick-and-mortar stores and it’s an exclusive CBD supplier for some of the largest retailers and wholesalers nationally, and our products are in over 23,000 stores. This may be seen as an unusual approach in a COVID environment, given the general consumer shift to online sales, but our trade partners have taken a really dim view of those that have pivoted to online sales amid the pandemic, and we decided to stick with them for the long-term. Given its variable cost model, Reliva is EBITDA positive and is an asset-light model that does not require any CapEx. Looking ahead, we are very bullish on what we have heard from the FDA regarding positive action. So when the FDA moves forward, those companies with a history of compliance and experience in brick-and-mortar will win. We therefore think Reliva is a wonderful asset and will continue to be a significant EBITDA contributor based on the most conservative estimate, which suggests CBD represents about $2 billion in retail revenue. So when we talk about global cannabinoids and leveraging Aurora's science and innovation, the non-THC parts of our portfolio could potentially be bigger than the THC parts of our portfolio, particularly with positive FDA action in the U.S. I will now turn it over to Glen to walk through the financial details.

Thanks, Miguel. Good morning, everyone, and thank you for joining us on today’s call. We will take a few minutes to review our first quarter 2021 results. Please note that the figures I will be going over today can be found in the press release we issued this morning, and they are all in Canadian dollars unless otherwise stated. I should also note that in accordance with IFRS standards, the comparative revenue figures for Q4 2020 have been reduced slightly to reflect the removal of discontinued operations results from our ancillary revenues. Our first quarter fiscal 2021, the period from July 1st to September 30, 2020, our net revenue, all of it from cannabis businesses, came in at $67.8 million, a bit higher than the $60 million to $64 million range we previously provided. Our sales mix remains evenly split, with the consumer cannabis segment delivering $34.3 million in net revenue and our medical cannabis segments delivering $33.5 million in net revenue. So let me dig into revenue a bit further. In the first quarter, our medical revenue was up slightly. Underlying this was a temporary decrease in Canada of about $600,000, as we transitioned all of our patients to a new integrated sales platform, where they have access to all Aurora medical brands, including MedReleaf, CanniMed, and Aurora and to Whistler. Aurora continues to have a significant advantage in Canadian medical market share. But more than offsetting that temporary decline was the stellar performance from our international medical business, which continued to show the strength of our expertise and brands with a 41% increase quarter-over-quarter to almost $6.5 million of revenue. I should remind you that our leadership in the Canadian and international medical markets is very important to our bottom line and long-term value creation, bringing sustainable growth expectations and a very solid gross margin profile averaging in the high 60% range in both Canada and internationally. Our Q1 consumer revenue declined 3% over Q4. This is despite the growing overall market. Now, Miguel has outlined both the challenges and the opportunities for the Canadian consumer market, and we see Q1 consumer revenue as reflecting a period of transition for us. Despite the challenges, there are certainly some bright spots, including a $2.5 million increase in derivative product sales and a $1.1 million increase in U.S. CBD revenues. We also recently launched our Daily Special vape offering, quickly capturing consumer attention and the number three spot in Ontario. Of course, this is just the first vape launch in a planned full brand portfolio of vape offerings in the near term. Turning now to our margins. Adjusted gross margin before fair value adjustments on overall cannabis net revenue remained strong at 48% in Q1. This compares to 50% in the prior quarter. But excluding the $2.6 million of ramp-up costs at our Aurora Nordic facility in Denmark, our overall Q1 adjusted gross margin was actually 52%. Medical margins continue to deliver important levels of profit at 67% overall, excluding our Nordic ramp-up costs. And consumer margins improved to 38%, due mainly to product mix, with a heavier weighting in 2.0 products in the quarter. Inventory levels increased by about $27 million overall from the previous quarter. We are making progress in reducing this growth, and as Miguel has noted in his remarks, between the facility closures currently being executed and opportunities to align current demand and production needs at our ongoing facilities, we expect to bring this into balance during the fiscal year. Cannabis is a long weed dime agricultural crop with a challenging demand schedule to forecast; alignment does take a bit of time. Since Miguel’s remarks regarding shifting more fixed cost to variable over time are also very important to our plans to drive to sustainable positive cash flow in the near future. Looking now at SG&A including R&D, we successfully reduced SG&A costs, which we define as including R&D spending as well, from over $100 million in Q2 2020, down to $43 million in Q1 2021. This excludes approximately $4 million of termination costs related to the business reset. As an important driver of our profitability and positive cash flow, I am encouraged to tell you that we continue to operate at our targeted quarterly SG&A run rate in Q2 to ensure the entire company is incentivized to find incremental opportunities to further reduce this important metric. We believe this level of SG&A spend is quite sustainable and capable of supporting a much higher revenue line. So pulling all this together, adjusted EBITDA in Q1 2021 was a loss of $57.5 million, but that included a number of previously communicated restructuring costs including employee and contract terminations. Adjusting for these costs and in accordance with our bank covenant definition, adjusted EBITDA for Q1 is $10.5 million. This is the third consecutive quarter of improvement as we continue to work towards positive cash flow. I will just make a couple of comments regarding our cash position and cash flows now. As of November 6th, our consolidated cash position was $250 million, compared to $162 million as of June 30th. The cash balance reflects the improvements in our recurring cash flows, which I will describe in a moment, as well as cash raised through our ATM program in the last couple of months. It also reflects payments in October for major annual costs of insurance and employee bonuses. The balance on our term debt stands at $101 million at November 6th and we remain in compliance with all debt covenants under this agreement. We are very happy with the continued excellent relationship and ongoing dialogue we have with our very supportive banking partners. For cash flow, the amount of cash we used in Q1 was similar to that in the prior quarter. However, the mix within cash used showed significant positive progress. We used $25.2 million in cash to fund operations excluding working capital investments and used $47.4 million for contracts and employee termination costs. These costs included the previously announced termination of the UFC agreement. We also paid $15 million for capital expenditures in Q1, down materially as many lengthy projects are now complete. Increases in net working capital were $37 million in the quarter driven by a $14 million increase in accounts receivable and a $25 million increase in inventory. As both Miguel and I have described earlier, we continue to execute plans to more closely align production levels with demand. Finally, in the quarter, we also used $18.2 million in cash to reduce our term debt and lease obligations. So cash used in operations and for capital expenditures are crucial metrics in our drive towards generating sustainable positive free cash flow, and both have improved significantly and consistently over the past several quarters. In our Q2 2020 fiscal quarter, the last quarter before we announced our business transformation plan, we used $86 million in cash in operations not counting working capital investments and $128 million for capital expenditures. So total outflow of $214 million for just these two items. This compares to I just reported Q1 total of about $40 million for these same two items. We made the decision to reposition our company to be a leader in our industry and drive towards positive EBITDA and cash flow. The actions we have taken have improved cash outflow on these recurring items by over 80% within three quarters. Even with a solid balance sheet and rapidly improving cash flows, we still believe that access to capital is of paramount importance, particularly in an environment of rapid change and value-driving opportunities. So you will notice that we recently filed the new shelf prospectus that is intended to protect the company and our shareholders as we navigate through an uncertain environment. But we are firmly convinced that our focus on getting cash flow positive as quickly as possible will both demonstrate the excellent long-term value creation possible in this industry and will alleviate the need for traditional equity capital as far as possible. As we have shown with our progress on the business transformation, we will continue to prudently manage our liquidity as we drive to positive EBITDA and cash flow. To conclude, as I mentioned in our last report to you, I am incredibly excited for the vision and tactical plan that Miguel has laid out here. I am seeing recovery in the Canadian consumer business show signs of traction. When you add that to the leading position we have in medical cannabis globally, the excellent gross margins we continue to deliver, a vastly improved SG&A cost structure and an important platform for growth, along with a much improved balance sheet, you may be able to understand why we are quite bullish on Aurora's future and for our shareholders. So thanks for taking the time with us on this busy reporting day. Before we take questions, I’d like to now turn the call back to Miguel for a few closing remarks.

Thanks, Glen. I want to close by highlighting the steps of the plan we are executing now for the Canadian consumer market. First, we are focused on driving sales of premium brands and flower, Whistler, San Raf, and Aurora. Second, we are focused on winning share in key growth formats, vape, pre-rolls, edibles, and concentrates. And third, evaluating and executing on opportunities to align our production and manufacturing costs to sales and shift our model away from fixed to variable costs. I am very confident in the early execution of these tactical plans. We know what we need to do to be successful across our main markets and are already seeing early signs that we are on the right path. As CEO, it is my responsibility to ensure that the entire team is executing accordingly to their respective responsibilities. This entails continuously looking for more effective ways to capture top-line opportunities that are margin accretive and extract even more efficiencies from operations. When we are successful, we not only strengthen our financial condition, but over time build a sustainable and growing level of adjusted EBITDA and a base of positive free cash flow that can be used to invest globally over a multiyear horizon in both the THC and non-THC cannabinoids. We look forward to sharing our progress with respect to our plans and reaching these goals over the coming quarters. Thank you. Operator, if you can please open it up for questions.

Thank you. Our first question comes from Vivien Azer with Cowen. Please go ahead with your question.

Hi. Good morning.

Good morning, Vivien.

So understanding this is a transitional quarter, let's take it a little bit more near-term. Obviously, a lot of volatility in the markets, and elections are incredibly topical in the United States. So, Miguel, perhaps this is a great opportunity for you to level set everyone on what you view as the tangible and likely regulatory pathways for a more notable entry into the U.S. beyond CBD?

Well, good morning, Vivien, and it’s a great question. I think, like most things with me, my background really colors my opinion, having spent 20 to 25 years in the tobacco business, you saw a lot of uncertainty and there are a lot of corollaries here. So first and foremost, while everyone is hyper-focused on potential federal action, I would really draw your attention to what’s happening at the state levels. When you talk about controlled substances and regulated products, state level actions, in many ways, have more applicability in the short-term than federal actions. You see that in CBD today in the U.S. and the cannabinoid business, and you clearly see it in the THC bearing cannabinoids. We had four really important states pass comprehensive cannabis legislation, and so that starts to move the ball forward in terms of when do you get to this tipping point. Now, on the federal side, the Biden-Harris position is clear, and I think it’s going to have to be a little more articulated on what the timing is. Depending on what happens with the runoff election in Georgia, the Republicans' control of the Senate has a key impact. So all in all, if you boil that all down, I guess, I would say the following sort of three things. First and foremost, very positive news at the state level, we see both in the U.S. and globally, and increasing sort of openness towards THC bearing cannabinoids, and that bodes well for a company like Aurora. Secondly, there is work to be done to see what a federal construct looks like, and third, and I think this is the most important piece by far, is that if and when you see countries, including the U.S., pass federal regulations and legislation, the experience that the Canadian LPs have had in Canada as the largest federal construct on manufacturing, packaging, production, sales, and marketing— all of those things instantly become really valuable. By the same token, the rigor of getting into a market like Germany or Poland or Israel—that is muscle memory that you can’t just replicate quickly. So we continue to learn, we continue to see those pieces as being portable. At a time in which there is an opening for us in the U.S., we think that we will have a ton of resources and a ton of interest because of all those experiences. That’s how I would couch it and I’m not here to give a particular timeline because I think that’s, as you know, probably trying to predict legislation at a federal level.

Absolutely. And I appreciate that perspective. Miguel, if I can squeeze in a follow-up.

Sure.

As it relates to the Senate election, to the extent that the Democrats do not take the Senate, do you want to offer a view on what that means in terms of pathways and catalysts? Thanks.

Yeah, I mean, it’s easier to say that if Sarah McConnell and the Republicans keep control of the Senate, that that sort of is it. I mean, as we have learned with states like Illinois, the economic benefits of legalization of medical or recreational cannabis have become a bit of a bipartisan issue. And so, I think we have to see. Unfortunately, with the pandemic of COVID, you’re seeing a lot of budget shortfalls, and a lot of people are looking towards a responsible, regulated version of cannabis in order to fill that. So I think, Vivien, we will have to see. Historically, Democrats have supported such cannabis initiatives and Republicans haven’t always. That’s not the case. We have not seen that in CBD. As an example, when we look at Republican governors, particularly in say, Texas or Florida, and they are seeing the benefits of a regulated, thoughtful approach on non-THC bearing cannabinoids. I don’t think it’s a foregone conclusion that the Republicans, given their focus on fiscal prudence, wouldn’t also have a similar opinion under the right construct. And again, those companies that have acted responsibly in a compliance-driven manner in Canada clearly are going to have an advantage when that construct presents itself.

Understood. Thanks for the time.

Thank you very much.

Our next question comes from the line of Pablo Zuanic with Cantor Fitzgerald. Please proceed with your question.

Thank you. Good morning.

Good morning, Pablo.

Good morning.

I would like to follow up on the previous question. When you observe Canopy Growth licensing Tokyo Smoke and Tweed to Acreage to increase brand awareness, and you hear Aphria emphasizing the strategic significance of the SweetWater deal in craft beer for enhancing their brand relevance, do you feel that you need to undertake a similar approach to promote and establish awareness for your brands in the U.S., or do you think it's still too early, and there's ample time to focus on that? Thank you.

Well, thank you for the thoughtful question, Pablo. I mean, listen, I am not here to be critical of anyone else’s approach, particularly as it builds awareness. I think the two examples you gave are a bit different. One is about leveraging infrastructure and expertise, and the second to your point is about awareness. My opinion is that when you have high quality brands that can operate in a variety of different markets, as we do, I think there’s opportunity. The biggest thing, though, Pablo, to me is all of your capabilities to be able to execute at a time at which it makes sense. Obviously, there are structural challenges for publicly-traded companies to operate today in the U.S. That doesn’t mean, though, that you can’t build infrastructure and capabilities for a time in which it is federally regulated, and that’s really what we are focused on. So we will be opportunistic. I clearly expect that a lot of folks will be deeply interested in what we have been able to do around the world from a regulated standpoint. I would also tell you that the science and genetics, genomics, and experience with the plant may be one of the most portable aspects of both our business and other pieces of business. So it doesn’t give me any pause that our friends at Canopy have done what they have done and the folks of Aphria have done what they have done with the craft brewery in Atlanta. We feel very confident with our position. We feel very confident that the resources that we have will be attractive, and then at the time in which it makes sense, you will see us be there.

Okay. I’d like to follow up on the Canadian market. I didn’t notice much in the press release regarding the outlook or comments for the quarter. However, you did outperform in the September quarter, posting $68 million compared to the $60 million to $64 million range. Can you provide insight into what drove that? Since guidance was issued late in the September quarter, I’m also interested in your comments regarding the outlook for the December quarter in recreational sales. I have some concerns because, when I review the market data, especially for high fire, I see evidence of a successful shift in derivatives and premium brands, but I also notice a significant decline in your value flower sales, which still play a key role in your overall revenue. What does this indicate for your total sales in the December quarter? I would appreciate any clarification regarding the earnings beat and where we stand for the December quarter in recreational sales. Thank you.

I will take the second half and then turn it over to Glen to discuss the first half. As I mentioned, these are significant shifts to address. I've been very focused on premium flower derivatives and vapor products, which have a long history considering my previous role at Logic. It's important to note that many companies are offering low-cost flower at the lower end, and that has influenced the market. You will see changes as we and others adjust production to meet consumer demand. Looking at the profit margins, for instance, Whistler's discount flower is priced at 10 times per gram, and we are set to strengthen our presence in the areas I've previously mentioned. You have seen this with vapor products, and we will do the same with pre-rolls and concentrates. I’m not concerned about our profitability depending on low-cost flower, as commoditization in that segment is not ideal. We are confident in our strategy, and having premium assets is crucial. For those who believe the market will fully commoditize, I suggest looking at trends in California and Colorado. In over 50 to 100 years of regulated products, there's clearly a market for premium offerings within the regulated framework. The margins for those derivative products are indeed stronger. Glen, would you like to take Pablo’s first question?

Yeah. Thanks. Good morning, Pablo. Yeah. Listen, we have a range, and as we are closing our books, it looks like we are getting toward the upper end of the range and potentially a little bit over. I wasn’t comfortable giving you guys any sort of additional guidance beyond that range or shifting until we got through all of this, the review to close the final closing of the book and review with our auditors. And for instance, you will see in our MD&A where we disclose more vapor in our revenues. In particular, our revenue provision is about a million dollars lower than it would have been the previous quarter. That will take some time to work through. So, the outcome—we knew we are at the top or maybe slightly over. In fact, as we looked at finalizing the book and recording all the proper provisions and things like that, we ended up coming in slightly above the range. That’s about it.

That’s good. Thanks. Thank you to both.

Yeah. Thank you, Pablo.

Our next question comes from a line of Michael Lavery with Piper Sandler. Please proceed with your question.

Thank you. Good morning.

Good morning, Michael.

So can you— even if the timing of any entry into THC in the U.S. is certainly unknown? How much thought have you given to your strategic approach or how you would plan to go-to-market? I am specifically curious how you view interstate commerce? Do you see that as an inevitability, and if so, would you wait for that to come into place before trying to make an investment or entry, or would you go ahead and begin on a state-by-state approach? How do you think about that?

Well, first, as you look at the things that we have to do to be successful, say, in Germany or in Israel, or in Poland, there are a lot of similarities to what you would have to do in the U.S. If you look at everything we have had to do in Canada, there are a lot of similarities to what I believe you will have to do in the U.S. So, so much of the—I know it’s fun to talk about brands and marketing and devices and formats, but the real heavy lifting is going to be on the back end. So IP, genetics, trademarks, science, compliance, manufacturing protocols, GMP, ISO certification, packaging compliance, testing protocols, sales, and marketing. And so, if I was to ask—if I wanted anyone to focus on who are the companies that are going to win long-term, look at the companies that do that. Yes, clearly, having some brand awareness and excellence in terms of consumer awareness will be critical. But in a new regulated category, it’s going to be all of the other stuff that I just mentioned that’s going to clearly make a difference, and we are working on that every day, all day—not only in Canada, but around the world, and that benefits us greatly in the U.S. Now, Michael, as you know, the legal restrictions or the sort of different aspects of what a publicly-traded company has to do in order to be compliant will require some form of a federal construct. Now, as I mentioned earlier, there are a lot of different pathways to get there that are not just a red-blue issue, that can be around economics and a variety of different things. Clearly, I think for the U.S. and for the states to unlock the greatest amount of economic potential, interstate trade and shipment will have to be there. I mean, if you look at, it’s somewhat of a corollary of the farm bill on CBD. It would be incredibly challenging if you continue to ring-fence these states and have to produce, register, license, grow, and sell all within a state, and that really creates, I think, limitations on how you—the true economics. Now some might say, well, but that’s always going to exist because the states are going to want their piece of the pie of the economics of how that’s grown. We don’t see that in tobacco. We don’t see that in alcohol. We don’t see that in spirits. We don’t see that in pharma. So I think as this proceeds really to unlock those economics and whether it’s compliance or all of these other aspects that would be there, you would have interstate and then at that point, you are starting to get into a federal construct and at that point things open up. I do believe we have a leading position. I do think the expertise that the Canadian LPs have will be in high demand for all the reasons that I mentioned. There’s nothing currently globally like Canada. While U.S. FDA and other regulatory agencies don’t always follow international protocols, there’s no question it’s going to influence it. Because strong neighbor, already a lot of different interactions, and so I think there is a big advantage for those LPs that have successfully navigated.

Okay. Thanks for that. And just a follow-up, you have mentioned genetics and genomics a couple of times. Can you give us maybe a little more color on how you see Aurora differentiated or standing out there and then how that translates marketplace execution either with the consumer or anyone else?

Aurora over its lifespan has acquired a significant amount of companies and resources, and with a lot of those companies has come a very significant library of genetics and genomics. Like any other agricultural company, genetics have a lot to do with yields, a lot to do with durability of the plants, a lot to do with the output. Clearly, given the variances in how we see people use cannabis in the articulation of all those core metrics, whether it’s intensity or onset or offset, genetic and genomics are really important in this category, like they would in most of these regulated types of categories. So as you think about that expertise and the value of that and being able to leverage that in a market the size of the U.S., it becomes incredibly important, and again it’s the life cycle of it. It’s the fact that these assets and these outputs have been tried and tested over multiple crop cycles in multiple markets and different environments. All of those things are valuable as you get into a market the size of the U.S. where you really can’t be as niche, and there will be under a potential federal construct value for large scale agriculture like you are seeing in Canada today. So, again, that all plays a role in how quickly and how effectively and how thoughtfully you can go to a market with the size of the U.S.

Okay. That’s great. Thank you very much.

You are very welcome, Michael.

Our next question comes from the line of Tamy Chen with BMO. Please proceed with your question.

Thanks. Good morning, everyone.

Good morning.

First question is, I wanted to understand better the shelf with the $500 million U.S. ATM. I mean, it’s quite a significant amount. So I mean, how should we and investors think about that? Have you taken that on so you can ride out the challenging environment in Canada, or is it also how you are thinking about the U.S., you mentioned opportunistic a couple of times? So I just wanted to understand that given it’s a pretty sizable amount.

Glen, do you want to take that one?

Yeah. I will get started on that, Tamy. Just to correct something you said, it’s not an ATM, it’s the shelf prospectus and that just pre-qualifies shares for issuance or any securities for issuance and is pretty broad. It allows us to issue debt; it allows us to issue shares, certainly should we see an opportunity to do so. But it’s not an ATM. If we are to use an ATM, we would file a supplement to be able to do that and you would see that should we do that at some point. So this is really, as Miguel mentioned in his remarks, just the hallmark of any mature company having a shelf prospectus qualified and available opportunistically. That’s the way to think about it. It’s not an ATM; it doesn’t allow us to sell shares tomorrow under an ATM unless we file a supplement.

Yeah. I guess, Tamy, the only thing I’d add to it, we mentioned this a bit earlier, if you look at cash burn or the cash component, which has become such an important metric for a lot of good reasons. On cost and cash use, we have cut about $60 million in cash expenses from our SG&A in three quarters. We have significantly reduced our CapEx over that time and now really at a run rate focused around maintenance CapEx going forward. I think overall the focus on cash is headed in the right direction. If we look at the industry, if we look at our peers, we are clearly well-capitalized. But I think the big thing also is understanding the market is appreciating both business execution and rock-solid liquidity. When we proved to investors we have actually on the plan we put forward, I really don’t want that success to be overshadowed by perceived liquidity issues. As we move forward in the tactical plan, gaining back market share and growth of those premium segments in Canada, we really want to have those financial resources available to be opportunistic, as you have mentioned. So I just would add that color about the importance of having both sides of it. It should really allow people to uniquely focus on execution, particularly in the recreational cannabis business.

Got it. Okay. That’s helpful. Thank you. And I guess my follow-up is, if you could just elaborate a bit more on what you were talking about in shifting more production costs from fixed to variable? I mean, does that consider even more facility closures and more leverage of third-party supply? Can you elaborate on what you meant by that? Thank you.

Sure. I’d be happy to. The base premise—if you go back—all these facilities, the amount of production in Canada that in a lot of ways was built to service global opportunities and to service a market that is bigger than currently there. I’ve got a long history of using variable versus fixed. I will tell you, the one thing I can’t predict in those categories that things are moving very quickly. To hardwire yourself to these massive fixed costs when you don’t know exactly what the outcome is, I think, doesn’t best serve. Secondly, we all know there is plenty of great high-quality product available, particularly in Canada. While we will have to have the EU GMP facility over in Denmark, which is a tremendous asset to have—clearly there is plenty of work for that—there is an opportunity in Canada, particularly with these large-scale facilities. We have announced the turnaround of five of them, a couple of them are already closed, and yes, we are looking at some external sources to give us greater flexibility so that we don’t have to carry all those costs and also be in a good position. This applies to both flower, as well as a couple of other items. If you look at other businesses I have been a part of, some might argue, have been quite successful, you don’t hardwire huge fixed costs. You give yourself maximum flexibility and then once a category is really on firm footing and you can determine exactly where it’s going, you can make more educated decisions. I am very confident that you are going to find us in a strong position regardless of which way the category moves, particularly in between the formats.

Our next question comes from the line of David Kideckel with ATB Capital Markets. Please proceed with your question.

Hi. Good morning, guys.

Good morning, David.

Good morning.

Congrats on the quarter. I want to just go down into your international medical cannabis opportunity a little bit more in detail, if that’s okay. Just to note, one of your competitors also announced results this morning. Their international medical cannabis component sales were actually down quarter-over-quarter versus Aurora. You and sales are up. So my question is, given just how important this channel is overall, as Glen, you mentioned, gross margin in particular, do you see this trend continuing with upward sales on the international channel specifically? I will just note to give that question some color, one of the comments made by the competitor was that it’s a very crowded space. So just any color you can offer with not only market potential there, but how is Aurora navigating the complexities associated with medical cannabis on an international scale? Thanks.

I mean, first and foremost, I think we are bullish. As I mentioned before, if you think about the permissive nature or the movement of legal cannabis across the globe, opportunities are more prevalent and are going to happen more frequently than the opposite. I just would throw that out there as a general tailwind. Secondly, I will tell you that compliance, regulatory, having facilities in Europe and the navigation of specific aspects about infrastructure that’s focused on science, technology, and regulation are differentiators. As markets internationally are becoming more, I guess, professionalized and more sophisticated, companies like Aurora will be advantaged if they can produce the quality cannabis in a certain manner with a certain level of infrastructure. I’m not here to dismiss or be critical of any of our competitors, because I have great respect for them. We like where we are, and we like the possibilities that the EU facility in Denmark provides for us, and we like the conversations that we are having with external partners based on our history of compliance and science-based production. As long as those tailwinds continue with cannabis being permitted and opened internationally, I think what we bring to the table and continue to invest will be a compelling argument.

Just to add a little bit to that.

Okay. And then…

You will see in our MD&A where we pull apart the international business; you can see the revenue is mainly generated at a flower and there is a developing market in Germany, actually quite a healthy one for extracting oil and things. It’s important to note that the licensing that we got at our Aurora Nordic facility in Denmark includes oil, so it’s flower and oil, and we intend to use that facility to supply the European markets and the international markets, in fact, whether it’s Europe, Israel, or whatever, to free up the Canadian facilities. The oil licensing out of Nordic is important because that’s an opportunity for us to grow in Europe in a part of the market we haven’t actually been participating in very strongly.

Got it. Okay. That’s helpful. So certainly, it sounds like there’s a lot of room for growth there. My follow-up question is just shifting gears altogether to beverages. I know Aurora currently does not have a presence in the beverage category; maybe that’s because in the U.S. they have been kind of a swap. But with all the technology that Aurora and others have had, we are seeing an uptick of beverages, specifically in cannabis. I am just wondering, do you have a preference either way moving forward? Is beverage a category that you are looking to get into? Thank you.

Well, we do have a beverage in Canada. We have a shot which has done quite well. My opinion on beverages, I guess, is a couple-fold. First is, in these categories, I would argue that there’s not a significant advantage in being a first mover. We’ve seen that in a variety of other corollary categories around. I am very respectful of what our competitor has done. I think what’s more important is having a strong innovation system. Can you bring high-quality products to market that meet consumer needs at a proper price point? I believe Aurora is developing those capabilities and you’ve seen it with vapor. Secondly, if and when there is going to be an opportunity in beverage, clearly, we have all of the other pieces put together and all of our plant genomics and everything we would need in order to play in that category. What I do believe, though, is that this category is moving so quickly that to make outsized bets and presuppose exactly where the consumer is going is a mistake. We are going to continue to offer a variety of consumer options, particularly in emerging categories. I could argue that concentrates, vapor, and pre-roll today have much more actionable opportunities from an economic standpoint, and if and when beverage or any other category like that emerges, we will be there. I will also say that we see in California and Colorado those are really bellwether states and operate about a year, 10 months to a year from a consumer standpoint ahead of where Canada is at, and if we start to see inclinations that beverage or something else is really taking off in those markets or any other sort of bellwether market that we get consumer data on, we can quickly pivot. I respect others making that push. We don’t see it as an opportunity today, but if and when it is there, we would be there. Like I said at the beginning, these categories are not one where first mover status matters.

Our next question comes from the line of John Zamparo with CIBC. Please proceed with your question.

Thanks. Good morning.

Good morning, John.

The factors—you listed as being success indicators like IP, science, and testing, and packaging. I’m trying to assess how you monetize that. Does it assume a federal pathway to operate in the U.S. and Aurora is the one executing that? Or do you think about selling that expertise to local, state-level providers? Or is there an assumption of an additional equity investor partnering with Aurora? I know there’s a great deal of unknowns there, but I would like to get a sense of how you think about monetizing the factors where you can lead U.S. or international competitors?

Well, it’s a great question. I think there’s—the good news is there are a ton of different ways to do it. If you look at companies like Monsanto or other companies that are branded, there are a variety of different ways to get there. I think the main thing to understand is at the time in which the U.S. legalizes cannabis either at the medical side or on the recreational side, clearly, the Canadian companies are going to have a massive head start in terms of understanding what that type of construct means. So listen, whether that means we are opportunistic through M&A, whether there is licensing, whether there is inherent IP, all types of things. What I do know is that our continued focus and effort in being compliant and being thoughtful around the globe puts us in a position where others are not. I have—listen, I have tremendous respect for the MSOs in the U.S. and what they have done, but the fact of the matter is they have not operated in the federal construct. They have not operated in all of these different markets, and that is a different animal. So whether that’s a partnership, whether that’s a go at alone, whether that’s a bright things, I am not going to stand here and presume what that is. But what I can say is all the hard work that we are doing around the globe to be successful is portable, can be plugged and played into the U.S. There is no disconnect there. We don’t have to take resources away from what we are doing to be more attractive in the U.S. We don’t have to focus on that. So we continue to be in a good position of optionality. I would say again, the Canadian LPs are going to have a significant set of resources that upon federal legalization of either side will be, I would argue, uniquely valuable.

Okay. That’s helpful. I will pass it on. Thank you.

Thank you.

Our next question comes from the line of Matt McGinley with Needham. Please proceed with your question.

Thank you. My question is on the cash bridge. You started the second quarter with $133 million in cash and with the equity raise you did and with the cash balances that you had. I think by November 6th you had $250 million, it implies to, I think, had around $50 million in cash losses. Are the 2Q cash losses still on the operating side, and that the revenue isn’t covering the cost, or is this more related to working capital and CapEx?

Yeah. Thanks for that. I think I mentioned in my remarks, and you just passed over fairly quickly, we did have a couple of the larger annual costs in October, including our insurance, which is in excess of $10 million paid out in October, and also our employee bonuses, which is in the same sort of neighborhood. So we take those out of the cash burn in terms of turning our focus on operations is delivering right now.

Our next question comes from the line of Owen Bennett with Jefferies. Please proceed with your question.

Good morning, guys. Hope you are well?

Good morning, Owen.

Good morning, Owen.

Just the one question from me on dry flower, so sequential decline driven by Daily Special, so arguably in line with the new strategy and playing less focused there. But the balance being flat would also suggest share loss continues in the over more premium brands, which is not in line with the new strategy. Ideally, we would like to see this moving upwards. Can you maybe speak a bit more to this and when would you expect to see share on the premium brands in flower start to pick up with the actions that you are taking? Thank you.

Sure. Well, listen, I’ve just gotten in the seat, and so some of these things take a little bit longer. What I can tell you is that you are going to see a significant focus on our premium flower and we have some tremendous brands, as you know, Whistler, San Raf, and Aurora. The company had gone through a lot of transitions, as you know, in the first half of the year, and there was quite a bit of interest in getting to that transition. To be honest, that Daily Special launch that happened in February and March was so—I think it took everyone by surprise. So there are a couple of things going on. First and foremost, it takes a little bit to get those premium brands established. Secondly, we have had very substantive and good conversations with our trade partners about that. Third, we have to look at, in some ways, better articulation on format and packaging, and those things take a little bit longer than just flipping a switch and saying we care about San Raf, Whistler, and Aurora. I don’t want to give you timing. I think, listen, I am impatient with all things. I think as you look at the Headset data, retail takeaway data, you will see it. What I can tell you is that you are not going to see competing priorities from us. You are not going to see us trying to do both things exceedingly well. I don’t think you can. So our focus will be on the premium flower and not on the deep commoditization that’s happening on the low-cost flower. You’ve got 1,300 stores, which is an amazingly small amount of stores, and you can muscle 1,300 stores through marketing, trade marketing, and sales execution, all of which I’ve got a long history with. I can tell you that our focus of those resources will be on premium products and premium accretive margins such as vapor and pre-roll. So I know it’s not the exact answer from a timing standpoint you want. But you know better than anyone and have access to that data you will see how they are doing and I will be—we will be happy to answer it as we go along.

We have reached the end of the question-and-answer session. Mr. Martin, I would now like to turn the floor back over to you for closing comments.

Well, thank you. I want to thank everybody for your questions. We really appreciate your interest in Aurora. While it’s early days, under my tenure, I am very excited about where we are going and I really appreciate that all of you took the time here today. Lastly, and probably most importantly, from all of us, we hope all of you are safe and healthy and we look forward to seeing you soon in person in the future. All the best.

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.