Good afternoon, ladies and gentlemen. My name is Michelle and I will be your conference operator today. I would like to welcome everyone to Canopy Growth’s Fourth Quarter and Fiscal Year 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. I would now like to turn the call over to Tyler Burns, Director, Investor Relations. Tyler, you may begin the conference.

Thank you, Michelle. Good morning and thank all of you for joining us today. On our call, we have Canopy Growth’s Chief Executive Officer, David Klein; and Chief Financial Officer, Judy Hong. After markets close today, Canopy Growth issued a news release announcing the financial results for our fourth quarter and fiscal year ended March 31, 2023. In addition, we filed our comprehensive annual report on Form 10-K for the fiscal years ended March 31, 2023, and 2022, which contains our audited financial statements for the fiscal year ended March 31, 2023, as well as restatements of the following previously filed periods. Audited consolidated financial statements for the fiscal year ended March 31, 2022, originally included our annual report on Form 10-K for the fiscal year ended March 31, 2022, and unaudited consolidated financial statements for the quarterly periods ended June 30, 2022, September 30, 2022, and December 31, 2022, originally included on our quarterly reports on Form 10-Q for such quarterly periods. The news release and financial statements are available on our website and under the investor tabs and have been filed on EDGAR and SEDAR. Before we begin, I would like to remind you that our discussions during the call will include forward-looking statements that are based on management’s current views and assumptions, and that this discussion is qualified in its entirety by the cautionary note regarding forward-looking statements included at the end of the news release issued today. Please review today’s earnings release and Canopy’s reports filed with the SEC and on SEDAR for various factors that could cause actual results to differ materially from projections. In addition, reconciliations between any non-GAAP measures to their closest reported GAAP measures are included in our earnings release. Please note that all financial information is provided in Canadian dollars, unless otherwise stated. Following prepared remarks by David and Judy, we will conduct a question-and-answer session where we will take questions from analysts. To ensure that we get to as many questions as possible, we ask analysts to limit themselves to one question. With that, I will turn the call over to David.

Thanks Tyler. Good afternoon, and thank you for joining us. I’d like to acknowledge that today’s call is taking place later than originally planned. And I appreciate the collective patience and flexibility of all the attendees on this call this afternoon. During the call today, I’ll cover four key topics: First, the progress of our transformation plan and the performance of our Canadian cannabis business in fiscal '23; second, addressing the BioSteel Review and our strategy to accelerate the BioSteel business; third, an update on Canopy USA and the progress on entering the U.S. cannabis market; and finally, the path forward for fiscal '24. Following my remarks, Judy will provide a brief review of our fourth quarter and fiscal '23 results and share an update on our path to profitability. She’ll also discuss our balance sheet and the actions we are taking to strengthen our financial position and improve liquidity. Fiscal '23 was a challenging yet transformative year marked by substantive change. The Canadian cannabis industry continued to be challenged by systemic regulatory issues, a continued battle with the illicit market and delays in government action on both sides of the border. And internally at Canopy, we faced executional challenges as we transitioned our genetic strategy and cultivation practices, which led to delays in achieving commercial scale. I’m proud to say that we’re now delivering consistent quality as evidenced by consumer demand for the iconic Tweed brand. And we’ve taken the necessary actions to simplify our business by undertaking a complete transformation through the following initiatives: The full divestiture of our national retail operations; exiting cultivation in Mirabel and Smiths Falls; moving post-harvest manufacturing to our former beverage building in Smiths Falls; adopting a flexible third-party sourcing model for cannabis beverages, edibles, base, and extracts; and reducing headcount across the business with approximately 1,200 positions eliminated. Our team has worked diligently over the past fiscal year to complete the majority of these initiatives on or ahead of schedule. A transformation of this magnitude takes time to demonstrate its full results, but we’re already seeing effects of our actions with SG&A expenses and COGS already delivering a combined $125 million through the end of fiscal '23. We expect to reduce overall costs by $240 million to $310 million in total by the end of fiscal '24. Through continued discipline and stable commercial performance in Canada, along with further simplification of our business, we’re on a path to realizing profitability. I’ll now address the BioSteel Review. As we disclosed earlier this spring, during the preparation of our financial statements for our 2023 Form 10-K, we identified certain trends in the booking of our sales for our BioSteel business unit. With the oversight from the Audit Committee, we launched an internal review together with independent external counsel and forensic accountants. Based on the results of the review, we’ll be implementing several remedial actions to strengthen our controls for the BioSteel business, which are outlined in the 10-K. We felt it was important to act swiftly to provide stability to the business at this pivotal time. To this effect, we have exited several members of the BioSteel leadership team and are considering all legal remedies available to us, including litigation to recover damages and costs associated with and resulting from the findings of the BioSteel Review. Despite this, we have great confidence in the BioSteel brand, which saw a 101% revenue increase in fiscal '23. According to Nielsen, BioSteel’s share of isotonic beverage sales in the Canadian national convenience and gas channel reached 11% in the fourth quarter of fiscal '23, up from 3% in the year prior. We’re continuing to drive momentum in the Canadian market by doubling down on the food, drug, and mass market channels, as well as club accounts with prominent BioSteel displays at Costco this summer. In the U.S., IRI data shows BioSteel’s ACV at 38% in the fourth quarter of fiscal '23, up from 19% in the prior year. Growth drivers include the BioSteel NHL partnership, which delivered incredible visibility for the brand during the Stanley Cup playoffs. As we look ahead to the strategy to sustain brand growth, we’ll be tightening the geographical focus in the U.S. to prioritize key regional markets and place a sharper emphasis on the specialty retail channel such as gyms to build loyalty with athletically inspired consumers. At the same time, we also must address BioSteel’s drag on our profitability, which Judy will speak to further in her remarks. As we focus on our core cannabis business, we’ll continue to evaluate all options for BioSteel. With the groundswell of momentum behind the brand in North America, we anticipate strong top-line growth leading to profitability in the years ahead. Next, I’d like to spend a few minutes discussing the performance of our Canadian cannabis business in fiscal '23. Overall, our adult-use cannabis B2B revenue in the fourth quarter of fiscal '23 ended slightly higher sequentially compared to the third quarter of fiscal '23. We view this as a positive given the challenging dynamics in the Canadian market and the scale of internal change that our team managed during the quarter. One of the most important achievements driving this performance was the strong resurgence of the iconic Tweed brand in the flower and pre-roll categories, which continue to dominate the Canadian adult-use market. The primary driver of this comeback has been a marked improvement in flower quality, fueling strong consumer demand, propelling Tweed’s rise to the number 9 brand spot in the Canadian adult-use market in the fourth quarter of fiscal '23, up from number 16 in the year prior. As we look to the year ahead, we’re excited to have taken another significant step forward to unify our North American house of brands. In late May, we announced that Canopy now controls all distribution, marketing, and sales of Wana branded products in Canada. Our sales team is eager to represent Wana, which has held the top spot for edibles in Canada for the past three years. We’ve planned an ambitious brand growth strategy in Canada and are working with the Wana team to deliver industry-leading innovation like the passionfruit pineapple CBG gummies. With the addition of Wana, we expect incremental gains to our adjusted EBITDA as we cement Canopy as Canada’s leading edibles company. Now, I’d like to speak briefly to our progress on our entry into the U.S. cannabis market through Canopy USA, which I firmly believe is the best approach to gain exposure to the rapidly growing U.S. market. To advance this strategy, we filed a revised proxy statement with the SEC in the current quarter, which outlines revisions to the structure of our interest in Canopy USA in order to ensure continued compliance with NASDAQ’s listing rules. Following regulatory review, we plan to subsequently file a definitive proxy statement that will pave the way for a special meeting, during which shareholders will be asked to approve the creation of a new class of non-voting exchangeable shares. Upon receiving the required shareholder approval and the conversion of Constellation shares from common to exchangeable, Canopy USA is expected to exercise its rights to acquire Acreage, Wana, and Jetty. Our primary objective for Canopy USA is to optimize the value of our entire U.S. ecosystem by leveraging their brand portfolios, routes to market, and operations. Overall, we continue to believe the Canopy USA platform positions us favorably for the continued evolution of the U.S. market. Finally, I’d like to outline our business priorities for fiscal '24. Our priorities are designed to deliver sustained revenue and adjusted EBITDA growth for all key business units. For our Canadian cannabis business, that means prudently managing expenses to deliver a stable to growing top line. We see this being driven by continued gains across the Tweed brand, including flower and pre-rolled joints. We’ll apply the same enhanced cultivation processes that have improved our flower quality across the Tweed brand to strengthen the competitive positioning of Doja and 7ACRES. On the medical side of our Canadian cannabis business, we expect that Canopy will continue our momentum by focusing on driving insured patient registrations. For our international medical cannabis business, we’re focused on the continued growth of our Australian and European sales by improving the consistency of supply of high THC flower strains and the sales of new products, including the increased distribution of our medically certified Storz & Bickel vaporizers. And speaking of Storz & Bickel, we anticipate growth in the North American market with dedicated sales resources in place in the U.S. along with new product innovation coming to market in fiscal '24. And for BioSteel, FY24 is expected to mark a year of growth as the brand focuses on expanding its North American market position. These priorities, in addition to monitoring continued value creation through Canopy USA, will lay the foundation necessary for Canopy to achieve positive adjusted EBITDA and position us for long-term North American brand-driven leadership. That is our primary objective. With that, I’ll now turn it over to Judy.

Thank you very much, David, and good evening, everyone. I’ll start by discussing our balance sheet. I’ll then briefly recap our fourth quarter and full year 2023 results, including additional details around restatements related to BioSteel. I’ll then review our fiscal 2024 priorities and outlook. Let’s start with the balance sheet. As of March 31, 2023, we had $783 million in cash and short-term investments, and total debt of $1.3 billion, of which $557 million was classified as current portion of the long-term debt. Subsequent to March 31, 2023, we’ve taken a number of additional actions to strengthen our balance sheet. In April 2023, we paid down USD 93.75 million of our term loan at a 7% discount as part of the second paydown related to the October 2022 agreement. Also in April, we refinanced $100 million of the 4.25% unsecured July 2023 notes held by a subsidiary of Constellation, which we intend to negotiate converting into shares. In addition, the USD 100 million related to the February 2023 convertible debentures has now mostly been settled through equity. Adjusting for the payments made in April, the Constellation notes and the February 2023 convertible debentures, our cash and short-term investments would be $666 million and current portion of the long-term debt would be $237 million, due in July '23 plus accrued interest. With that in mind, I’d like to address the growing concern disclosure in our 10-K. We ended fiscal '23 with $783 million in cash and short-term investments, and we believe that we have a number of options that are executable over the next several months that will ensure we have sufficient capital to fund our ongoing operations and meet our financial covenants. For one, we’ve already taken meaningful actions to reduce the operating cash burn in the businesses. These include the business transformation program announced during FY23, which is expected to reduce total operating expenses by $240 million to $310 million by the end of fiscal 2024, inclusive of the $125 million realized during fiscal 2023. Cost reduction initiatives underway at BioSteel are expected to further reduce our overall cash burn. Additionally, we’re also working on other options to improve our liquidity. These include facility dispositions, several of which have already closed and additional agreements have been signed that are expected to generate up to $150 million in proceeds by the end of September 2023. So far during Q1 of fiscal '24, we received proceeds of $56 million. We’re also exploring additional options to monetize our noncore assets and businesses, and we’re also in discussions with our lenders on various options to reduce our debt in an accretive manner. I’ll now review our fourth quarter and full year fiscal '23 financial results. In Q4, we generated consolidated net revenue of $87.5 million and full year fiscal 2023 revenue of $403 million. Full year revenue declined 21% over the restated prior year period. When adjusting for the impact of divestitures of C3 and the Canadian retail business, revenues declined 11% and the declines moderated in the second half of the year. Reported gross margins during Q4 were negatively impacted by restructuring charges and sizable inventory write-offs, most of which relate to our strategic shifts in Canada and BioSteel. Adjusted gross margins of negative 18% were impacted by additional inventory write-offs at BioSteel. Adjusted gross margin, excluding BioSteel, was 11% in Q4. Adjusted EBITDA loss of $96 million during Q4 FY 2023 included approximately $12 million of inventory write-offs at BioSteel and $1.5 million of bad debt expense in the Rest of the World cannabis. Excluding increased investments at BioSteel, adjusted EBITDA improved relative to Q3 FY23, demonstrating progress against our business transformation plan. On a full year basis, our adjusted EBITDA loss was $350 million, driven by negative gross margins in Canada and BioSteel as well as significant investments at BioSteel. Included in the full year adjusted EBITDA losses are approximately $50 million of costs that are one-time in nature or not expected to recur given the significant changes that we have made to our businesses in fiscal 2023. SG&A expenses, excluding acquisition costs and depreciation and amortization expenses, saw a decline of 3% on a full year basis, inclusive of the significant increase in this year’s marketing investments at BioSteel. Excluding BioSteel and adjusting for the Canadian wage program benefit received last year as well as the impact of dispositions, SG&A expenses would have declined by 21% or approximately $94 million year-over-year. Free cash flow of a negative $143 million was a 13% increase in outflow compared to Q4 of fiscal 2022, driven by increased investment in BioSteel and costs related to the formation of Canopy USA. Now let’s take a look at the results from each area of our business for Q4. Canada cannabis revenues declined 8%, excluding the retail business we divested during Q3 of fiscal '23. Importantly, our adult-use B2B sales increased slightly compared to Q3 and medical sales increased 8% compared to the year-ago period and was stable relative to Q3. Canada cannabis adjusted gross margins were negative 1%, but adjusted cash gross margins improved to 33% when normalizing for the impact of depreciation and inventory write-downs. Canada cannabis gross margins have now improved for four consecutive quarters, and we expect additional improvements in fiscal '24 as we execute on our cost reduction program. The Rest of the World cannabis segment, excluding C3 divestiture, was down 19% year-over-year. We saw another record quarter of revenue in Australia, which was offset by the impact of shipments to Israel in Q4 FY 2022 and a decline in our U.S. CBD business on a year-over-year basis. Within our consumer products businesses, Storz & Bickel revenues declined by 28% in Q4 fiscal '23 versus Q4 fiscal '22, with last year’s Q4 benefiting from sales of new products. We did see sales improve during the second half of fiscal 2023 versus the first half, and full year gross margins in this business remained resilient at 40%. This Works’ revenue decreased 10% in the current period compared to the prior year due to continued challenging UK retail dynamics. We are seeing signs of stabilization in this business and adjusted gross margins improved to 44% from 40% in the prior year period. I’d like to now spend a few minutes discussing BioSteel’s performance. After a thorough review that David alluded to, we have restated the historical financials with the overall correction of the revenue misstatement, resulting in a decrease of approximately $10 million in net revenue for the fiscal year ended March 2022, or 2% of consolidated net revenue and $14 million in net revenue for the nine months ended December 2022, or 4% of consolidated net revenue. A majority of the restatements relate to international sales, which we have exited already. Our consolidated adjusted EBITDA has also been restated by a similar amount for fiscal 2022 and nine months through fiscal 2023. The restated financials for fiscal '22 as well as quarterly financials for Q1 and Q3 of fiscal '23 are included in our 10-K. During Q4 of fiscal 2023, BioSteel generated net revenue of $19.3 million and full year fiscal 2023 revenue of $69.6 million. Q4 gross margins were significantly impacted by lower than forecasted sales during fiscal '23 as well as our decision to exit international businesses and refine our U.S. commercial strategy. We also faced increases in sales and marketing costs related to endorsements, sampling and trade marketing programs. With BioSteel being a significant drag on our overall profitability, addressing its cost structure is an important part of Canopy’s overall profitability plan. We’ve already undertaken additional cost reduction initiatives at BioSteel that are incremental to our company-wide restructuring actions initiated in fiscal 2023. First, we have a number of gross margin improvement initiatives that are well underway, including exiting unprofitable customer programs and reducing the depth and frequency of certain promotions, transitioning to a new warehouse model that will eliminate significant fixed cost obligations and reduce shipping costs, reduction in inventory to lower our storage costs, and new contracts with more favorable product costs across our powder and ready-to-drink products. These initiatives are expected to generate significant year-over-year improvement in gross margins in fiscal 2024 and put the business on a firm path to achieve gross margins comparable to other premium beverage businesses over time. Second, following stepped-up investments in sales and marketing during fiscal 2023, work is well underway to significantly rightsize our marketing spend. We have already exited or have not renewed a number of third-party marketing contracts. We’re reviewing our endorsement to ensure we have a focused approach. And we’re reducing costly sampling programs that don’t generate returns. And we’re exploring additional options available to us to ensure that we can further minimize cash burn at BioSteel. I’d like to now discuss our fiscal 2024 priorities and outlook, and our actions to achieve profitability across the businesses. In Canadian cannabis, we believe we have rightsized our operations to achieve positive adjusted EBITDA at current run rate revenue of $35 million to $40 million per quarter. Our cost reduction program is well underway with the majority of the savings expected to be driven by reduced headcount, which we’ve already implemented, and the elimination of facility costs that we’ve closed. In Rest of the World cannabis, we expect continued growth in Australia and Poland as well as improved performance in Germany, driven by new supply of high THC flower. We also expect improvement in profitability as we further streamline the business by shifting to a distributor model in the UK, and we do not anticipate bad debt expenses of over $3 million to recur during fiscal 2024. Storz & Bickel is focused on returning to growth in fiscal 2024, driven by new product launches later this year and renewed focus in the U.S. with additional resources expected to drive enhanced presence in that important market. We expect Storz & Bickel to maintain healthy margins in fiscal 2024. For BioSteel, the focus in fiscal '24 is further building on its strong momentum in Canada, refining its U.S. strategy and improving gross margins while rightsizing its marketing spend. This Works is expected to stabilize top line while improving profitability in fiscal '24. So taken together, we expect to approach positive adjusted EBITDA across all of our businesses, except for BioSteel, as we exit fiscal 2024. We also expect BioSteel to show meaningful reduction in its adjusted EBITDA losses in fiscal 2024 as we execute on our growth plan and cost reduction initiatives. Liquidity preservation and strengthening our financial position is also a key priority in fiscal '24. To this end, we’re focused on executing against the announced cost savings program, mitigating operating cash burn at BioSteel, maximizing proceeds from asset divestitures, and reducing our debt and interest expenses in an accretive manner. We believe the combination of these actions, along with our existing cash balance and expected proceeds from facility divestitures should provide us with the flexibility to drive our businesses forward while meeting all of our debt obligations. In conclusion, with significant transformation underway, we believe we now have elements in place to achieve profitability in Canada and significantly reduce our cash burn for the total company while we work towards strengthening our balance sheet and driving continued focus on our core cannabis business. This concludes my prepared comments. We will now take questions. Operator, David and I are now happy to take questions from the analysts.

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

I wanted to ask about your target for EBITDA by the end of fiscal '24. Since you don’t break out EBITDA by segment, it's a bit difficult to evaluate your path toward achieving the targets you've outlined today. I'm curious if you could provide more insight into how the cannabis segment, specifically the Canadian business's P&L, is shaping up now that you've completed your asset-light transition. For instance, I'm uncertain about the potential margin now that you've outsourced much of your manufacturing, especially with the closure of your challenging growth facilities. Additionally, it's hard to assess your SG&A and how much of that pertains to the Canadian business and the previously asset-heavy infrastructure. Any further details you could provide on how the P&L for that business is developing would be appreciated. Thank you.

Thank you, Tamy. I agree that looking at our profit and loss statement can be complex due to all the moving parts, making it challenging to provide clear details on segment profitability. We are working on ways to improve this going forward and aim to offer more clarity in the future. Regarding Canada, I want to emphasize a few points. Firstly, we have adjusted our operations and SG&A cost structure to ensure profitability at a revenue run rate of $35 million to $40 million per quarter. We have achieved this for a couple of quarters now and believe we are positioned to deliver adjusted EBITDA at breakeven or better with this level of revenue. There are several key factors contributing to this. We have significantly reduced costs in our cost of goods sold and have implemented headcount reductions. We’ve also closed several facilities, which saves us on costs such as insurance and taxes, along with other non-personnel expenses associated with a large operational footprint. The closures we have made will begin to positively impact our P&L. Additionally, we are progressing faster than anticipated in exiting cultivation in Smiths Falls, which should provide further cost savings from our cannabis operations by the end of this quarter. We believe these changes will help drive our cash gross margin closer to the high 30% range we have previously discussed. Lastly, we have made various adjustments in sales, marketing, and G&A to ensure profitability with quarterly revenue at the $35 million to $40 million level.

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

I wanted to follow up on that question a little bit, but with a focus on BioSteel. Recognizing that there’s appetite to absorb continued losses in FY24 as you continue to grow the top line, certainly, it sounds like with some of the marketing realignment, the nonproductive sampling, revisiting some of the sponsorship agreements that certainly, you’re at least looking to narrow the magnitude of those losses. So, Judy, I was wondering, one, if you could kind of dimensionalize that path to profitability in BioSteel. And then, two, as a follow-up, David, maybe you could just comment on the realignment in terms of the priority retail channels in the U.S. because it seems like the reorientation of the brand kind of moves away from the channels with which you’re most familiar and have the deepest relationships. So just wondering whether that can create some dislocation in the top line that might impede some of the profit improvements that you guys have planned for FY24 on BioSteel.

I appreciate the question, Vivien. To clarify, we cannot accept the current level of operating losses at BioSteel. We recognize that BioSteel is significantly impacting our overall profitability, and we are committed to reducing cash burn in that business while also exploring options to further minimize cash impact at the Canopy level. Regarding the year-over-year changes in BioSteel's profitability, there were specific issues in fiscal '23 that affected profitability more than usual. We experienced substantial inventory write-downs and certain contract manufacturing expenses that should not recur in FY24, especially since we've acquired our manufacturing facility in Verona. We believe that adjusting our inventory levels will help prevent the same write-downs we saw in FY23. Additionally, we have several initiatives aimed at optimizing our marketing expenditures to ensure we create a pathway to profitability for this brand, which is performing well. We need to establish a more focused and disciplined cost structure to support the brand, which will also positively affect our overall profitability and contribute to a significant reduction in cash burn and improved adjusted EBITDA, along with our announced business transformation concerning Canada and our other operations.

Yes, regarding channel strategy, the challenges we've faced with BioSteel are unfortunate as they overshadow the brand's acceptance among consumers, which has grown 101% year-over-year. We believe the playbook used in Canada is the right approach for the U.S. BioSteel initially cultivated authentic connections with consumers on soccer fields, hockey rinks, and in gyms. Now, the brand occupies prominent shelf space in major retailers and sees increasing consumer demand. In the U.S., we plan to implement a similar strategy by gradually building the brand's presence, allowing consumers to genuinely connect with it as an authentic hydration product. Eventually, we aim to establish a footing in major retailers, leveraging familiar distribution channels. However, attempting to enter those retailers without first developing a solid brand base across the U.S. proved to be overly ambitious for a company of our size; thus, we have decided to temporarily scale back operations in the U.S.

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

So, I want to discuss Canopy USA's updated structure and its capacity to finance U.S. operations after the closure. While there won't be consolidation to comply with NASDAQ, I’m curious about the benefits of a public listing on NASDAQ for future funding. Would Canopy USA need to pursue another path for financing? Additionally, what are the overall plans for funding the Canopy USA business once this is finalized? Thank you.

Yes. I want to emphasize that the businesses are already collaborating to enhance their individual brands, operations, and market strategies. Much of this effort is underway while we await the approval to file our definitive proxy. Regarding funding, once the business closes, it will have more than enough cash available to support its growth plans for the foreseeable future. The real question is whether we might pursue additional inorganic initiatives with the Canopy USA structure, and we do have options to finance that using the established Canopy USA setup. While I wouldn’t expect that to be our immediate focus, we are capable of pursuing that as it stands, and the business will be adequately funded from day one.

And I would just add on, just the benefit of having a brand-led asset-light model in the U.S. really does minimize the capital requirements to really build out the business and scale. So we’re obviously deploying a similar strategy in Canada, and I think it’s important for people to understand sort of the reasons why we took this strategy in Canada as well, it’s really about ensuring that there are minimal capital requirements to build out a strong presence at scale.

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

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

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

Yes, John. Thank you for the question. Our balance sheet remains strong, with a cash position of $783 million at the end of the year. We anticipate that the facilities and dispositions we are currently closing or working on will generate an additional $150 million in proceeds by September 2023. We also expect a significant reduction in operating expenses in fiscal '24 as we implement our cost savings program. These measures should give us the flexibility to maintain funding for all of our businesses. Additionally, we are considering options related to our noncore assets and businesses to further strengthen our position as a cannabis-focused company. We have historically divested several noncore businesses and will continue to explore ways to simplify our operations and generate cash through these divestments. We also aim to reduce our debt over time in a way that adds value, which will improve our cash flow by decreasing interest costs. It is important to note that some proceeds from our facility divestitures will not be allocated to our term loan, which will also assist in lowering our debt and interest expenses in the long run.

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

I just was wondering if you could elaborate a little bit on, if you hit your plan as you have it now with EBITDA positive or breakeven by the end of the year, what does that look like on a cash flow basis? And what are some of your assumptions? You mentioned the divestitures that you’re trying to make or the facility sales. Some of that’s in hand, but can you give us a sense of how you’re valuing those and what the certainty is of that coming through? And how important is it in terms of just your liquidity management and just paint a little bit of a picture for how you’re thinking about how the year unfolds that way.

Sure. I'll address that question. Achieving our plan and lowering our costs to enhance our adjusted EBITDA is the initial focus. Additionally, we are actively working to reduce our debt and cut down on interest expenses, which includes actions we've already implemented. By reducing our costs, we anticipate over $20 million in lower interest expenses year over year, even with the current rising interest rates. We also foresee significant improvements in working capital due to better inventory management and a smaller operational footprint in Canada. BioSteel is also taking steps to appropriately size their inventory. All these efforts should lead to a substantial reduction in our operating cash outflow, with an expected nearly 50% decrease year over year. Our capital expenditures are primarily tied to executing our cost-saving measures, and in FY 2024, we estimate CapEx to be between $10 million and $15 million, including the cash needed for our cost savings program. We have already secured $150 million from closed proceeds and expect additional cash in the coming months. We're also exploring various options for further proceeds, which will provide us with liquidity options to consider, and we will share more details as they become available.

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

I just wanted to go back to BioSteel. And just given a lot of the commentary that’s been given with some of the positive trends with respect to the uptake of the products, whether it’s in the convenience stores, gas stations, where kind of your market share is. Just that’s sort of paired against the overall magnitude of some of the financial statement restatements. It looks like on a gross basis before restatement about 20% of the revenues were reduced. So, I would imagine there’s some big ticket items in there potentially. So, I’m just wondering if you could give a little more granularity on the nature of what the issues were with those restatements and if it has anything to do with products in the channel that ultimately couldn’t sell or shelf life or anything like that. It’s just something that I get a lot of questions on, given the magnitude of what was reported today.

Sure. I’ll start and David can add more detail. In my prepared comments, I mentioned that most of the restatements were linked to international sales. When we discuss the market share data in Canada and the U.S., that information is accurate and reflects real consumer takeaway numbers. These sales have gone through distributors and retailers and are ultimately reaching consumers, which indicates the strength of the brand in North America. In contrast, the international sales involved an opportunistic expansion by the BioSteel management team into certain markets using existing inventory. The issues with sales recognition have led to the financial discrepancies. This situation is quite different from the positive marketplace trends and the improvements in market share for that segment of the business. It’s unfortunate that these positive developments have been overshadowed by recent issues, but we still believe the metrics are vital for assessing the brand’s health. We remain confident about the future of that business.

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

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

David, I want to discuss Canopy USA. Could you remind us of the benefits it brings to the company? If I wanted to take a contrary view, I might argue that some of the advantages from the alignment between Jetty, Wana, and Acreage could have been achieved without this transaction. The benefits of investors recognizing these U.S. assets are now lost since you cannot consolidate them, and we’re uncertain about how you will report them in the future. Additionally, this situation has arguably been a distraction, especially with your main competitor in Canada taking control of Redecan. Perhaps there has been a missed opportunity in Europe; please correct me if I’m mistaken. This has been disruptive, especially considering the departure of the CEO and CFO of Acreage. I'm struggling to understand the benefits of Canopy USA given all of this. Thank you.

Thank you, Pablo. I want to highlight a few key points. We believe the U.S. market is one we need to succeed in, which is why we have adjusted our operations in Canada to achieve profitability at its current level. We see the U.S. as a target for profit, and we think our brand-focused strategy will be effective there. Jetty, Wana, and Acreage are already collaborating, and while they didn’t require a formal structure to do so, their integration simplifies operations. We expect to realize significant operational synergies from merging these businesses. Although we won't consolidate this in our results immediately, we will be able to discuss what Canopy USA will look like as an independent entity after the merger. Our strategy emphasizes focusing on the U.S. rather than expanding into other markets or categories. Judy pointed out our intention to streamline our operations to be primarily cannabis-focused and centered on North America, which we believe will create substantial value in the medium term. That summarizes our current stance, which we still believe is the right approach for us.

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

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

That’s a great question, Doug. I can say that we have a comprehensive remediation plan outlined in our filings regarding the issues we had with BioSteel. We conducted additional testing across our entire business to confirm that the BioSteel issues were not occurring elsewhere, and the results showed that they were not. This involved a thorough process that included forensic accountants, external legal advisors, our finance team, and our Audit Committee, which has two former public company CFOs. We put in significant effort to fully understand the issues that led to the restatement. As mentioned in our filings, we highlight our remediation plans, and our Audit Committee has requested biweekly updates on our progress, which we will provide. Additionally, a few years ago, the Canopy finance function faced challenges managing the complexity of our operations. However, over the last few years, we have developed a strong and talented team dedicated to maintaining a robust control environment. As a former public company CFO, I am embarrassed about the restatement. We have implemented measures to address the issues that caused it, and I do not anticipate facing similar problems in any areas we control moving forward.

There are no further questions at this time. So I will turn the conference back to Mr. Klein for any final remarks.

Yes. Thank you, and thanks all for joining us today. So, to highlight the key takeaways from today’s call. We’ve made substantial progress in transforming our Canadian cannabis business during fiscal '23. And we’ve entered fiscal '24 focused on strengthening the business moving forward. We’ve completed the BioSteel Review and expect the fiscal '24 strategy to drive the growth of the brand in North America while reducing our cash burn. And in fiscal '23, we introduced our Canopy USA strategy to optimize the value of our entire U.S. ecosystem. And we look forward to successfully concluding the regulatory review and progressing to a shareholder vote in the coming months. And finally, we continue to believe Canopy has significant opportunity ahead, both in Canada and the United States. Investor Relations will be available to answer additional questions. Have a good evening.

Ladies and gentlemen, this concludes Canopy Growth’s fourth quarter and fiscal 2023 financial results conference call. A replay of this conference call will be available until September 20, 2023, and can be accessed following the instructions provided in the Company’s press release issued earlier today. Thank you for attending today’s call, and enjoy the rest of your day. You may now disconnect your lines.