Good morning. My name is Joanna, and I will be your conference operator today. I would like to welcome you to Canopy Growth's Fourth Quarter and Fiscal Year 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. I will now turn the call over to Tyler Burns, Director, Investor Relations. Tyler, you may begin the conference call.

Good morning, and thank you for joining us. On our call today, we have Canopy Growth's Chief Executive Officer, David Klein and Chief Financial Officer, Judy Hong. Before financial markets opened today, Canopy Growth issued a news release announcing the financial results for our fourth quarter and fiscal year ended March 31, 2024. The news release and financial statements have been filed on EDGAR and SEDAR and will be available on our website under the investors tab. Before we begin, I would like to remind you that our discussion during this 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 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 remarks by David and Judy, we will conduct a question-and-answer session where we will take questions from analysts. With that, I will turn the call over to David.

Good morning, everyone. And thank you for joining us today to review Canopy Growth's fourth quarter and fiscal year '24 financial results. During the call, I'll share key highlights and achievements from the past fiscal year, demonstrating how Canopy is a stronger, fully cannabis-focused business that is poised for profitable growth in the year ahead across all of the most exciting global cannabis markets. First, let's touch on the transformative year that fiscal '24 was for Canopy. During the year, we took decisive actions to streamline our business by implementing an asset-light model. This has enabled us to focus on our core strengths while leveraging third parties to add scale and capacity when and where we need it, without the requirement to maintain extensive infrastructure or invest ahead of growth. This has improved our margins and accelerated our time to market as we focus on growth across all of our priority categories. In parallel, we took bold action to drive greater focus and reduce our cash burn by divesting Canopy's non-cannabis businesses as we go all in on what we believe is one of the most exciting consumer trends of our lifetime. These changes weren't easy and I'm very proud of the work that the entire Canopy team undertook to execute the strategic evolution and to ensure its success, all while enhancing our commercial execution, strengthening our financial position and establishing a platform for Canopy's future growth. As a result, Canopy is entering fiscal '25 with a strong foundation. We have a focused business. We're well positioned in the geographies and categories of greatest potential. And we've built a business that can deliver profitable growth. Looking to our performance in fiscal 2024, I'm pleased to report that our results in the year already demonstrate the positive impact of the changes we've implemented. Canopy now has an attractive gross margin profile across all of our businesses, a lean and agile organization that can support growth without a step change in costs, a strengthened balance sheet that has ample runway to support our business while investing for growth and financial performance that is nearing consolidated adjusted EBITDA profitability. Focusing on flower as the central pillar of our business, the consistent production of high-quality flower from our Kincardine and DOJA sites has strengthened our competitive positioning in the Canadian adult-use market, highlighted by the national resurgence of Twd. Additionally, we added over 2,300 points of distribution across Canada during the fourth quarter, including over 900 points for Twd flower and 650 points for our Deep Space Beverages, ensuring increased access to consumers as we enter the important summer selling season. In our Canadian medical business, an expanded product assortment in the Spectrum Therapeutics online store, as well as industry-leading care for our insured patients, has delivered a 16% increase in revenue year-over-year, marking the fifth consecutive quarter of revenue growth. Our international markets cannabis business also continues to benefit from increased demand for our high-quality Canadian cannabis, including in Australia, which delivered record revenue in fiscal '24. In addition, an expanded product assortment and improved commercial execution in Poland, the Czech Republic, and Germany also contributed to growth in our international markets cannabis business in fiscal '24. Moving on to our Storz & Bickel vaporizer business, exceptional demand for the brand's new Venty portable vaporizer, which was launched early in the third quarter of fiscal '24, required us to double production to meet higher than expected initial demand. When paired with continued demand for other Storz & Bickel devices, including the legendary Volcano, this contributed to Storz & Bickel delivering its best fourth quarter ever with net revenue increasing 43% year-over-year. In addition to these advancements in our commercial businesses, we also executed a number of actions to strengthen Canopy's balance sheet in fiscal '24. Collectively, these actions reduced Canopy's debt by over $700 million in fiscal 2024, which brings our total debt reduction to over $1.1 billion since the beginning of fiscal '23. Further, subsequent to the end of fiscal '24, we have also eliminated a $100 million short-term debt obligation and extended the maturity of a convertible note by five years. As a result, Canopy has no material debt due until March 2026 and has a healthy cash balance of over $200 million. Our strengthened balance sheet provides us with the certainty and flexibility required to power future growth, and we believe positions Canopy ahead of our industry peers. Our commercial businesses are showing momentum as we exited fiscal '24 and our plan sets the stage for a fiscal '25 that we believe will be a banner year for Canopy. Our Canadian production platform continues to deliver high-quality flower that is winning and retaining customers, both domestically and internationally. Upgrades are already underway at our Kincardine facility to increase our flower capacity in addition to securing flower through strategic procurement from third-party producers. And as the Canadian cannabis market continues to mature and consolidate, we expect excess capacity within the industry to present Canopy with tangible opportunities to accelerate speed to market, avoid capital investments until critical sales volumes are achieved, and to provide us with surge capacity during peak periods. We believe our plans, which reflect our focus on profitable growth versus chasing market share at all costs, will deliver healthy annual growth in Canada in fiscal '25 with stronger growth in the back half of the year. This growth will be driven by expanded flower capacity, increased distribution, a strengthened sales force and share gains across the pre-roll, vape, and softgel categories through the introduction of new products, which are arriving in the market as we speak. We also believe our plans for Canopy's international business will deliver healthy annual growth in fiscal '25. In addition to continued gains across our international markets, we anticipate Germany's legalization of cannabis will drive a significant increase in the size of the country's medical market as more doctors become comfortable prescribing cannabis and more patients explore its medical benefits. As a long-term leader in Germany, we believe Canopy is well-positioned to capitalize on this growth. We're actively working to expand our supply to Germany and to add additional third-party European-based suppliers to our offering. Looking to our premium Storz & Bickel vaporizer business, we plan to keep building on the brand's momentum and expect continued demand for the Venty, as well as expanded distribution in the US to drive significant growth for Storz & Bickel in fiscal '25. We believe that this homegrown German brand will benefit from greater cannabis adoption among German consumers. Further illustrating the strength of Storz & Bickel's connection and importance in the German cannabis industry, I'm pleased to highlight that Jürgen Bickel, Canopy's Managing Director of Storz & Bickel and the brand's Co-Founder, was recently elected as a Board member of the German Cannabis Business Association. We're pleased that Canopy and Storz & Bickel have strong representation within the association, the largest of its kind, as it continues to play a critical role in shaping the advancement of the medical and recreational cannabis markets in Germany. Shifting focus to the US, Canopy USA is moving forward rapidly and I would like to take the opportunity to reiterate our thanks to Canopy shareholders for their overwhelming support for the resolution required to advance this strategy. Overall, we remain highly optimistic about the potential of Canopy USA, which continues to lay the groundwork for accelerated growth across a number of key state-level cannabis markets. In the quarter ended March 2024, Wana finalized plans for expansion into three new states, New York, Connecticut, and Vermont, while also launching new gummy SKUs in Colorado to continue expanding the brand's product assortment. In addition, Jetty's award-winning products launched in the State of New Jersey, as the Jetty team takes the best of the West Coast to the Northeast. It's also important to note that Jetty's Solventless vapes ranked as the number one live rosin vape nationally in the US, which is quite impressive considering that Jetty vape products are currently available in only four states, California, Colorado, New York, and more recently, New Jersey. Shifting to Acreage, I'd like to acknowledge that the company has recently been operating as a distressed asset. However, we believe that Acreage continues to have tremendous upside. Recently, Acreage entered the New York market and continues to hone its presence in other key states, including Ohio, the seventh-largest state in the US, which is turning adult use in the month of June and where its operations are well positioned with botanist dispensaries in Cleveland, Canton, Akron, Columbus, and Wickliffe. Notably, in addition to locations in the largest population centers in the state, Acreage's retail operations have received multiple best dispensary awards over the last four years. Acreage also has a Tier 1 cultivation and processing facility in the state with significant expansion potential. We believe that with this setup and its entry into the Canopy USA ecosystem, Acreage is well-positioned to realize significant and profitable growth ahead. The timing for the advancement of our US strategy is also aligning nicely with major strides on the regulatory front, including rescheduling. We've been unequivocal in our support for rescheduling and believe that this change represents a leap forward for the industry. From a financial perspective, I'd like to emphasize that rescheduling is especially significant as it will provide an immediate and meaningful improvement to the cash flow of all state-legal cannabis businesses, including those within Canopy USA. In closing, fiscal '24 was a year of significant progress for Canopy Growth, where we demonstrated our capabilities and our enduring belief in the opportunity that is global cannabis. Looking to the year ahead, we're optimistic about our future. We have great exposure to the most attractive markets, we've got great brands, and we have a strong and experienced team. We continue to believe the opportunities ahead are significant. With the plans we have in place, we think fiscal '25 is poised to be Canopy's best year yet. With that, I'll pass the call to Judy to review our financials in greater detail.

Thank you very much, David. And good morning, everyone. I'll start by reviewing our fourth-quarter and full-year fiscal 2024 results, including the significant progress we've made across our P&L this year. I'll then discuss additional actions that we've taken to improve our balance sheet and cash flow, followed by our priorities and outlook for fiscal 2025. Let's begin with our fourth-quarter results. Q4 FY24 capped a transformative year for Canopy by showcasing organic revenue growth of 16% compared to Q4 of FY23 and a year-over-year improvement in gross margins, adjusted EBITDA, and free cash flow. Canopy delivered consolidated net revenue of $73 million in Q4 with all three business units delivering growth year-over-year led by Storz & Bickel, which increased revenue by 43% compared to a year ago. Consolidated gross margin in Q4 was 21%, again a significant improvement compared to 11% last year. Q4 gross margin was negatively impacted by temporary factors in Canada that I'll address later in the call. Full-year gross margin was 27% and cash gross margin, adding back noncash depreciation expenses and costs was 35%. Q4 adjusted EBITDA was a loss of $15 million, an improvement of 63% versus last year. Free cash flow was an outflow of $23 million, an improvement of $75 million compared to Q4 of last year and nearly a 50% improvement over the last quarter. I'd like to now review the results of our key businesses in more detail including progress against our path to profitability. Starting with Canada. Q4 net revenue was $37 million, up 4% compared to a year ago. Canada medical sales continued to grow strongly, increasing 16% compared to last year benefiting from customer mix towards a greater number of insured patients and larger product assortments in the Spectrum online store. Our adult-use B2B business was down 4% as growth in 7ACRES brands and contribution from Wana edibles was offset by declines in the Twd brand this quarter as we were supply constrained on certain SKUs. Canada gross margin in Q4 was 0% and cash gross margin, adding back noncash depreciation costs and costs was 13%. Let me unpack Canada gross margin for Q4, which came in softer than planned. We continue to generate year-over-year reductions in COGS from the cost reduction program. However, Q4 gross margin was negatively impacted by a few temporary factors. First, we experienced lower cultivation yields at the Kincardine facility, driven by seasonality and unplanned disruptions, which resulted in higher than expected inventory cost per unit. Second, with lower cultivation yield, the utilization of our manufacturing operation was reduced, driving under-absorption of our indirect cost. Lastly, the consumption of higher cost inventory, which was produced prior to our shuttering of the former Hershey facility, also negatively impacted gross margins. All of these factors are transient and we're already seeing improvement in cultivation yields as higher utilization of our manufacturing operation in Q1. Notwithstanding the lumpiness in our Canadian gross margins this year, we are pleased that our Canadian business achieved 31% cash gross margin performance in full-year fiscal 2024. In addition, we expect further improvement in Canada gross margins in FY25, driven by the installation of new LED lighting at Kincardine in the first half of fiscal 2025, which is expected to increase our cultivation yields in the upcoming winter months. In addition, we've already expanded our grow rooms to increase our cultivation capacity. Strategic sourcing of our flower supply at favorable cost is also expected to reduce our overall flower cost, and a new and flexible pre-roll machine is now up and running and is expected to significantly increase pre-roll production and reduce labor costs. International markets Canada sales increased 32% year-over-year. We saw outsized triple-digit sales growth in Poland in Q4. Germany also grew at a double-digit rate, which were partially offset by declines in its Storz & Bickel device sales in Australia in Q4. International markets cannabis gross margin was 40% in Q4 FY24, driven by a favorable shift in country mix with higher-margin pull-in sales contributing to a greater portion of sales this year as compared to the prior year period. Storz & Bickel revenue of $22 million in Q4 was up 43% compared to last year and also up 20% sequentially. We saw continued strong consumer demand for the new Venty portable vaporizer that was launched in Q3 and we've successfully ramped the production to meet demand for the Venty. Q4 also benefited from strong distributor and retailer loading of all Storz & Bickel devices ahead of 4/20 events and sales promotions. Storz & Bickel gross margin was 41% compared to 34% last year, driven primarily by stronger sales coming from products and geographies that carry higher margins year-over-year. Looking at our SG&A expenses for Q4 fiscal '24, total SG&A expenses declined 23% year-over-year, primarily driven by cost reduction program undertaken to date. Q4 fiscal '24 adjusted EBITDA loss was a negative $15 million, an improvement of $25 million compared to a loss of $40 million a year ago. Q4 adjusted EBITDA was impacted by a softer gross margin in Canada due to the temporary factors that I outlined earlier in the call. International markets in Storz & Bickel achieved profitability in Q4, driven by revenue growth and improvement in gross margins year-over-year. In Canada, but for the temporary factors, would have achieved positive adjusted EBITDA exiting fiscal 2024. Through the strategic transformation initiatives announced in April 2022 and February 2023, Canopy has now realized $280 million of cumulative cost savings, which is within our announced target cost savings of $270 million to $300 million. We've identified an additional $10 million to $50 million of cost reduction opportunities, mostly in corporate G&A, including savings in IT, insurance, professional fees, legal, and public company costs that we expect to realize by the end of fiscal 2025. I'd like to now review our cash flow and balance sheet. Free cash flow was an outflow of $23 million in Q4, an improvement of 77% compared to the prior year. Cash used from continuing operations was $22 million, which includes cash interest payments of $18 million, which was down from $36 million last year. Cash flow from investments of $26 million in Q4 included proceeds received from the BioSteel asset sale. During Q4, we also completed a private placement with proceeds of approximately $47 million, of which $30 million was used to pay down our senior secured term loan at a discount to par. Turning to the balance sheet. As of March 31, 2024, we had $203 million in cash and short-term investments and a debt balance of $597 million. Subsequent to the quarter end, we've completed several transactions that further reduced our debt and improved our balance sheet. First, we exchanged $81 million of the principal amount of the $100 million promissory note plus accrued interest held by Constellation into Canopy's exchangeable shares and canceled the remaining balance. Second, we issued a new five-year convertible note with gross proceeds of approximately $50 million and exchanged the CAD28 million note maturing in September 2025 to a note now maturing in May of 2029. Third, we've made an additional CAD7.5 million pay down of the term loan with the proceeds from the BioSteel asset sale. These actions have significantly enhanced our balance sheet by eliminating substantially all of our short-term debt obligations, reducing the senior secured term loan principal balance from USD750 million original to now USD354 million, which matures in March of 2026 and enhancing our cash position, which will provide flexibility to invest for future growth while funding our operations. We remain focused on executing additional activities to further deliver on our commitment to improve our financial position over the coming months. I'd like to now provide our key priorities and outlook for fiscal '25. In Canada cannabis, the business is now on a stable footing and we're focused on driving growth and profitably gaining market share in both the adult-use and medical channels by continuing to invest in product quality and expanding distribution while further improving our margins. In international market cannabis, we expect to see growth in our key markets of Germany, Poland, and the Czech Republic, and remain focused on ensuring consistent supply of high-quality products as well as launching new products into these markets in the near term. For Storz & Bickel, we're focused on accelerating growth in key markets driven by Venty as well as other product lines, which we believe will mitigate potential impact to Storz & Bickel's Australian sales following a recently implemented vape ban in the non-medical channel. Finally, we know that the impact from divested businesses will continue to negatively impact reported sales growth. FY24 results included $21 million of revenue from This Works, which was divested in December of '23 and $5 million of revenue from KeyLeaf, which was divested in February of 2024. From a phasing standpoint, we expect stronger year-over-year growth in the second half of our fiscal 2025, driven by increased flower supply and ramp-up of new products as well as lessening impact from divested businesses. We believe that we're on a firm path to achieving positive adjusted EBITDA at the consolidated level inclusive of corporate cost driven by sales growth from increased supply, expanded distribution, improvement in gross margins, and additional G&A savings. In closing, we're excited about the growth opportunity ahead of us and now have a strong foundation in place to achieve healthy profit margins and enhance shareholder value over time. This concludes my prepared comments. We'll take questions from the analysts.

First question comes from Aaron Grey at Alliance Global.

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

We have made substantial progress in our Canadian business year-over-year, achieving a full-year gross margin of 16% and a cash gross margin of 31%. This aligns with our expectations of reaching nearly a mid-30% cash gross margin after the restructuring actions we implemented in Q1. In Q4, a few temporary factors negatively affected our margins, impacting gross margins by several million dollars. Adjusting for these factors, we are looking at a gross margin in Canada of low to mid-30%. For Q1 and beyond, we anticipate further improvements throughout fiscal '25 due to our enhanced actions in Kincardine. Some of the benefits are expected to be realized later in the year; however, increased capacity from expanded grow rooms will be available sooner, and the lighting upgrades with LED installations in the coming months will assist during the winter months as we head into the latter half of the year. Overall, we expect Canada’s cash gross margin to fall in the mid to high 30% range for the full year, likely stronger in the second half compared to the first half. We are encouraged by the continued progress in Canada, which we believe will positively contribute to achieving adjusted EBITDA at the consolidated level, especially in the latter part of the year.

Next question comes from John Zamparo from CIBC.

My question is on the balance sheet, and I'm trying to better understand the comments about being able to invest for growth. I wonder how we should interpret that given the level of debt remaining, and what is the plan to repay that debt?

As I said on the call, I think the big change in terms of our financial position is that we don't have any near-term debt maturity of any substantial amount. The really the next tranche of the debt maturity is in March of 2026. We think that our underlying businesses are also showing improvement, we're reducing cash burn in a significant way and we've been able to also reduce our interest expenses in a meaningful way as we've reduced our debt. So really the investing for growth is just given our cash position that we have today as well as the ability to really deal with the maturity of debt in a prolonged time frame. I think it really gives us the flexibility to look for opportunities to invest in the greatest potential markets that we operate in as we speak, that doesn't mean that we are going to be investing in asset heavyweight. I think we've really transitioned to really being asset-light and opportunistic in finding partners. But I think it just gives us a lot more flexibility to look for those opportunities with the improved balance sheet position.

Next question comes from Yewon Kang at Canaccord Genuity.

This is Yewon Kang on behalf of Matt Bottomley. My question is just on the international segment. Obviously, you guys saw a significant growth quarter-over-quarter on the top line on the segment. You called out continued strength in Germany and Poland alongside some nonrecurring US CBD business opportunity there that overall helped the top line sequential growth. Can you provide more color behind this US CBD business opportunity? And if you have any plans to kind of expand on this going forward, because it seems like it also has kind of a positive impact on the margin under that segment as well?

I can take that. If you look at our international markets, you really should think about our key priority markets, that’s Germany, Poland, Australia, and the Czech Republic. The US CBD business, as you may recall, has evolved within the Canopy organization. We've really been looking at a very, very targeted approach with that business as the regulatory unlock frankly hasn't happened the way that we thought it would. We have also decided that the best place for the US CBD business to reside is actually Canopy USA. We are in the process of winding down the business at least from a Canopy perspective, and then transitioning that business over to Canopy USA that we expect to happen sometime in Q2 of our fiscal 2025.

Next question comes from Pablo Zuanic at Zuanic & Associates.

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

So Pablo, in terms of approvals, we don't need any shareholder approval or anything of that nature. We do need to go through the approval process in each state where we have a license. What we've done is we've exercised their option to purchase Wana and Jetty, that's going through the regulatory approval process. Right now, we don't expect there to be any problems with those approvals. Canopy has the obligation to exercise its right to purchase Acreage and then move it into Canopy USA; that hasn't happened yet, but we expect that'll happen in the near term. We don't see any major regulatory hurdles. But as you know, it'll take some time to get through each individual state's process. In terms of the ability like what will happen with the businesses and how they improve their capital situation across CUSA, I really think it is a function of putting those CUSA businesses together. Not included in our cash balance is a significant cash balance sitting at Wana and Jetty, which the CUSA assets would all have access to. We expect actually that Acreage's challenges related to capital structure will be able to be resolved through amalgamation with CUSA. Also, keep in mind when we put those businesses together, there will be top line synergies available to all of the CUSA entities, but there will also be some significant bottom line synergies available as well when you eliminate the public company costs currently associated with Acreage.

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

Great. Thank you for attending today's call. To wrap up, as we started, we're singularly focused on cannabis. Our businesses are growing and have delivered healthy improvements in gross margins. Our business is approaching positive adjusted EBITDA on a consolidated basis, and Canopy USA is moving forward rapidly. We're excited about where our business is going. I firmly believe that Canopy offers a unique option for exposure to growth across the world's most exciting cannabis markets. Thanks again for joining us. I encourage you to try some of our outstanding products as you enjoy the summer ahead. Our Investor Relations team will be available to answer additional questions. Have a great day, and thank you, everyone.

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