Neptune Wellness Solutions Inc (NEPT) 2023 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Neptune Wellness Solutions Inc. Third Quarter 2023 Earnings Conference Call. (Operator Instructions)

女士們先生們，早上好，歡迎來到 Neptune Wellness Solutions Inc. 2023 年第三季度收益電話會議。 （操作員說明）

I would now like to turn the conference over to Valter Pinto, Managing Director, KCSA. Please go ahead.

我現在想將會議轉交給 KCSA 常務董事 Valter Pinto。請繼續。

Thank you, operator, and hello, everyone. Thank you for joining us today for the Neptune Wellness Solutions Fiscal Third Quarter 2023 Earnings Conference Call. With me today are Michael Cammarata, President and Chief Executive Officer; and Raymond Silcock, Chief Financial Officer.

謝謝接線員，大家好。感謝您今天加入我們的 Neptune Wellness Solutions 2023 財年第三季度收益電話會議。今天和我在一起的是總裁兼首席執行官 Michael Cammarata；和首席財務官 Raymond Silcock。

All amounts discussed today are in U.S. dollars, and our remarks may contain forward-looking information representing our expectations as of today and may be subject to change. Today's conference call contains non-GAAP financial measures, specifically adjusted EBITDA to provide investors with a supplemental measure of our operating performance and thus highlighting trends in our core business that may not otherwise be apparent when relying solely on GAAP financial measures.

今天討論的所有金額均以美元為單位，我們的評論可能包含代表我們截至今天的預期的前瞻性信息，並且可能會發生變化。今天的電話會議包含非 GAAP 財務指標，特別是調整後的 EBITDA，為投資者提供我們經營業績的補充指標，從而突出我們核心業務的趨勢，這些趨勢在僅依靠 GAAP 財務指標時可能不明顯。

Management also uses adjusted EBITDA in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our capital expenditure and working capital requirements. Adjusted EBITDA is not a recognized, defined or standardized measure under GAAP. Our definition of adjusted EBITDA will likely differ from that used by other companies, including our peers, and therefore, comparability may be limited.

管理層還使用調整後的 EBITDA 來促進不同時期的經營業績比較，編制年度經營預算並評估我們滿足資本支出和營運資金要求的能力。調整後的 EBITDA 不是 GAAP 下公認的、定義的或標準化的衡量標準。我們對調整後 EBITDA 的定義可能與其他公司（包括我們的同行）使用的定義不同，因此可比性可能有限。

Non-GAAP measures should not be considered as a substitute for or in isolation for measures prepared in accordance with GAAP. Investors are encouraged to review our financial statements and disclosures in their entirety and are cautioned not to put undue reliance on non-GAAP measures and view them in conjunction with the most comparable GAAP financial measures. We do not undertake any obligation to update any forward-looking statements, except as may be required by Canadian and U.S. securities laws. Assumptions were made in preparing these forward-looking statements, which are subject to risks as laid out in our public filings found on SEDAR and EDGAR.

非 GAAP 措施不應被視為替代或孤立於根據 GAAP 編制的措施。鼓勵投資者全面審查我們的財務報表和披露，並告誡不要過分依賴非 GAAP 指標，並將其與最具可比性的 GAAP 財務指標結合起來看待。我們不承擔任何更新任何前瞻性陳述的義務，加拿大和美國證券法可能要求的除外。在準備這些前瞻性陳述時做出了假設，這些陳述受到我們在 SEDAR 和 EDGAR 上找到的公開文件中列出的風險的影響。

I would now like to turn the call over to Michael.

我現在想把電話轉給邁克爾。

Thank you, Valter, and hello, everyone. Today, we reported our fiscal third quarter 2023 results for the period ended December 31, 2022. In November, we completed the divestment of our cannabis business. Operating a business with such a highly controlled substance was prohibitively expensive from an administrative standpoint, and we are already seeing the benefits from this decision. The sale included the cannabis plant in Sherbrooke, Quebec and the cannabis brands, allowing us to gain significant cost savings and operational streamlining from redirected resources towards a simplified CPG forward corporate structure.

謝謝 Valter，大家好。今天，我們報告了截至 2022 年 12 月 31 日止期間的 2023 財年第三季度業績。11 月，我們完成了大麻業務的剝離。從管理的角度來看，使用如此高度受控的物質經營一家企業的成本高得令人望而卻步，而且我們已經看到了這一決定的好處。此次出售包括位于魁北克省舍布魯克的大麻工廠和大麻品牌，使我們能夠從重新定向資源到簡化的 CPG 遠期公司結構中獲得顯著的成本節約和運營精簡。

This move also allows us to pursue relationships with investors, corporations and banks going forward, who have restrictions against working with cannabis-associated businesses, and we have already taken steps toward improving our capital position, which Ray will be speaking to you about shortly. Neptune's management team and Board continue to evaluate and pursue operational and structural efficiencies, all in our continued effort to maximize stakeholder value.

此舉還使我們能夠繼續與投資者、公司和銀行建立關係，這些投資者、公司和銀行對與大麻相關企業合作有限制，我們已經採取措施改善我們的資本狀況，Ray 將很快向您介紹這一點。 Neptune 的管理團隊和董事會繼續評估和追求運營和結構效率，所有這一切都是為了讓利益相關者價值最大化。

As part of our ongoing cost saving and streamlining efforts, by the end of Q3, our headcount reduced by 66% year-to-date. These reductions have resulted in a cost savings of $6.6 million in annual salaries, a 46% reduction overall by the end of Q3. As well, management has asked the Board to revert back to its precannabis size and structure, which will also result in cost savings for the company.

作為我們持續的成本節約和精簡工作的一部分，到第三季度末，我們的員工人數今年迄今減少了 66%。這些削減導致年薪成本節省 660 萬美元，到第三季度末總體減少了 46%。此外，管理層已要求董事會恢復其前大麻規模和結構，這也將為公司節省成本。

Neptune is now a leading consumer packaged goods company with popular products that our retail partners and consumers are excited about. We have built a portfolio of good for you, good for the planet brands with evolving product lines and opportunities for further growth into the future.

Neptune 現在是一家領先的消費品公司，其產品廣受歡迎，令我們的零售合作夥伴和消費者感到興奮。我們已經建立了一系列對您有益，對地球有益的品牌，具有不斷發展的產品線和未來進一步增長的機會。

Starting with Sprout, our leading organic children's food and snack brand. This brand continues to outperform based on the KPIs we monitor closely. Not only achieving revenue growth for the comparable periods, but also distribution store count and fill rate, while also ramping up innovation and North American expansion in the third fiscal quarter. Sprout's successful partnership with Walmart continues with sell-through of the half-pallet seasonal display reaching 75% in 8 weeks. Sprout also continued its successful expansion into Canadian retailers, recently launching into Loblaws, the largest grocer in Canada. For total store count, Sprout distribution growth has reached nearly 28,000 doors in the United States and 1,350 doors in Canada, totaling 29,350 doors in North America.

從我們領先的有機兒童食品和零食品牌 Sprout 開始。根據我們密切監控的 KPI，該品牌繼續表現出色。不僅實現了可比期間的收入增長，而且還實現了分銷店數量和填充率，同時還在第三財季加快了創新和北美擴張。 Sprout 繼續與沃爾瑪成功合作，半託盤季節性展示的銷售量在 8 週內達到 75%。 Sprout 還繼續成功地向加拿大零售商擴張，最近進軍加拿大最大的雜貨店 Loblaws。就門店總數而言，Sprout 的分銷增長已達到美國近 28,000 家和加拿大 1,350 家，北美總計 29,350 家。

If we quickly have a look at the Nielsen data from 13 weeks ending December 31, 2022, Sprout sales outperformed the category by showing growth of plus 12.6%. Sprout now has the 2 fastest-growing organic meal items nationally and the highest sales velocity in the segment. This growth was largely driven by the categories of toddler meals, snacks and CoComelon pouches. Our toddler snacks are growing 35.5%, which is above the category average. As well, our CoComelon partnership has proven highly incremental to our growth with our Yes, Yes Veggie becoming our #1 selling pouch in our total pouch portfolio, Nielsen data last 13 weeks.

如果我們快速查看截至 2022 年 12 月 31 日的 13 週的尼爾森數據，Sprout 的銷售額增長了 12.6%，超過了該類別。 Sprout 現在擁有全國增長最快的 2 種有機食品和該細分市場中最高的銷售速度。這一增長主要是由幼兒餐、零食和 CoComelon 袋裝類別推動的。我們的幼兒零食增長了 35.5%，高於同類產品的平均水平。此外，我們的 CoComelon 合作夥伴關係已證明對我們的增長有很大的促進作用，我們的 Yes, Yes Veggie 成為我們總包裝袋產品組合中銷量第一的包裝袋，尼爾森過去 13 週的數據。

Sprout's strong fill rate of 85% for the third fiscal quarter was another key driver in its revenue growth. And so far, our Q4 fill rate is 80.3%. Sprout now has a 90% footprint in the market with more doors to grow inside our existing footprint as we are only at a 5% share. We plan on expanding our market share by winning more shelf space and continued product innovation.

Sprout 第三財季 85% 的強勁填充率是其收入增長的另一個主要推動力。到目前為止，我們的第四季度填充率為 80.3%。 Sprout 現在在市場上佔有 90% 的足跡，在我們現有的足跡內有更多的增長機會，因為我們只有 5% 的份額。我們計劃通過贏得更多的貨架空間和持續的產品創新來擴大我們的市場份額。

Sprout PB & Yayz are our newest innovation that launched in Q3, which continues Sprout's expansion of the snack category. The gluten-free, dairy-free and no sugar added formulation continues Sprout's commitment towards great nutrition for kids. Their strong initial sales demonstrate the large addressable market opportunity that this category has for Sprout going forward as we continue to expand our offering.

Sprout PB & Yayz 是我們在第三季度推出的最新創新產品，延續了 Sprout 對零食類別的擴展。無麩質、無乳製品和無糖配方延續了 Sprout 對兒童優質營養的承諾。他們強勁的初始銷售表明，隨著我們繼續擴大我們的產品範圍，這一類別為 Sprout 帶來了巨大的潛在市場機會。

Big kid meals have continued to roll out during Q3, and we see huge potential for revenue growth outside of the baby food aisle. We are very pleased with Sprout's progress and the results achieved in the third fiscal quarter.

大型兒童餐在第三季度繼續推出，我們看到嬰兒食品過道以外的巨大收入增長潛力。我們對 Sprout 在第三財季取得的進展和取得的成果感到非常滿意。

Sprout continues to focus on scaling our offering into new product SKUs in a cost-efficient way to further increase our leadership in the organic food market. Sprout products are now available in all 50 U.S. states, Canada and shipping direct to consumers through the Sprout website. We have partnered with several major retailers, including Target, Walmart, leading supermarket chains and both of the largest national pharmacy chains in the U.S. We are also shipping direct to consumers through the Sprout Organics website.

Sprout 繼續專注於以具有成本效益的方式將我們的產品擴展到新產品 SKU 中，以進一步提高我們在有機食品市場的領導地位。 Sprout 產品現已在美國所有 50 個州和加拿大銷售，並通過 Sprout 網站直接運送給消費者。我們與幾家主要零售商合作，包括 Target、沃爾瑪、領先的連鎖超市和美國最大的兩家全國連鎖藥店。我們還通過 Sprout Organics 網站直接向消費者發貨。

Turning now to Biodroga. For the first 3 quarters into the 2023 fiscal year, Biodroga has shown strong growth year-to-date across all key measures. These positive numbers have resulted from launching products with both existing and new customers. In particular, our MaxSimil product line continues to show solid sales growth as Biodroga's most popular product. Biodroga has worked closely with its customers, existing and new, to provide scientific materials to support consumer education on the health benefits of MaxSimil. We continue to innovate our product offering for customers, demonstrating the flexibility of Biodroga's strategy to align with customer demands.

現在轉向 Biodroga。在 2023 財年的前三個季度，Biodroga 在所有關鍵指標上都顯示出年初至今的強勁增長。這些積極的數字是由於向現有客戶和新客戶推出產品而產生的。特別是，我們的 MaxSimil 產品線繼續顯示出穩定的銷售增長，成為 Biodroga 最受歡迎的產品。 Biodroga 與其現有和新客戶密切合作，提供科學材料來支持消費者關於 MaxSimil 健康益處的教育。我們不斷創新我們為客戶提供的產品，展示了 Biodroga 戰略的靈活性，以適應客戶的需求。

For example, Biodroga launched a new roll-on product with an existing strategic customer in the third quarter. Customer retail and online sales for that product began in November. In addition, our marketing initiatives from the prior quarters being trade shows, website and social media presence have succeeded in bringing in new business to drive sales growth. Biodroga remains focused on cutting costs where possible to mitigate supply chain challenges, which is flowing through to margin improvement and impacting customer retention.

例如，Biodroga 在第三季度與現有戰略客戶一起推出了一款新的滾珠產品。該產品的客戶零售和在線銷售於 11 月開始。此外，我們前幾個季度的營銷舉措是貿易展覽、網站和社交媒體，已成功帶來新業務以推動銷售增長。 Biodroga 仍然專注於盡可能削減成本以緩解供應鏈挑戰，這些挑戰正在通過提高利潤率和影響客戶保留來實現。

To counteract raw material pricing increases that are being felt across the industry, Biodroga has also implemented price increases where possible to mitigate increased supply chain costs. But with the objective of minimizing price increases to our customers, we have also aggressively bid to find alternate suppliers and manufacturers when raw material prices and toll prices become too high. Finally, we are continually expanding our manufacturing network to ensure we can pivot to alternate suppliers when needed and expand our offering based on customer market demand.

為了抵​​消整個行業感受到的原材料價格上漲，Biodroga 還盡可能實施價格上漲，以減輕供應鏈成本的增加。但是，為了盡量減少對我們客戶的價格上漲，當原材料價格和通行費價格過高時，我們也積極競標尋找替代供應商和製造商。最後，我們不斷擴展我們的製造網絡，以確保我們能夠在需要時轉向替代供應商，並根據客戶市場需求擴展我們的產品。

Sales of our MaxSimil products are driven by 2 SKUs, MaxSimil 1,300 mg and MaxSimil 650 mg. After launching these 2 products in 2019, demand stabilized to about 1.3 million units per month over the next 2 years. In 2022, building on the groundbreaking results of a clinical study showing MaxSimil's significant superior absorption of omega-3, Biodroga and its customers continue to work at educating medical experts and patients about the benefits of MaxSimil versus standard fish oil. The study was published by the Journal of Nutrition in May 2021. These efforts have resulted in a 30% increase in average monthly sales for the year 2022 to 1.7 million units per month.

我們 MaxSimil 產品的銷售由 2 個 SKU 驅動，即 MaxSimil 1,300 mg 和 MaxSimil 650 mg。在 2019 年推出這 2 款產品後，未來 2 年的需求穩定在每月約 130 萬台。到 2022 年，一項臨床研究的突破性結果表明 MaxSimil 對 omega-3 的吸收具有顯著的優越性，Biodroga 及其客戶繼續致力於教育醫學專家和患者了解 MaxSimil 與標準魚油的好處。該研究於 2021 年 5 月由《營養學雜誌》發表。這些努力使 2022 年的平均月銷量增加了 30%，達到每月 170 萬件。

In December, we further proved the credentials of MaxSimil's technology with a study that showed Biodroga's omega-3 supplements led to faster absorption of combined curcuminoids of 40% higher compared to other formulation. That study was published by Nutrients in December 2022.

12 月，我們通過一項研究進一步證明了 MaxSimil 技術的可信度，該研究表明，Biodroga 的 omega-3 補充劑與其他配方相比，可使組合類薑黃素的吸收速度提高 40%。該研究於 2022 年 12 月由 Nutrients 發表。

As well, our pilot MaxSimil [lutein eye] study has just been completed. The study showed that the group that's supplemented with MaxSimil lutein appeared to experience a decrease in their eye prescription, while the placebo group experienced an increase in their eye prescription. The study also showed that MaxSimil lutein supplement helps maintain good cognitive health. The results indicate that the supplementation had significant impact on cognition when compared to the placebo. This study shows how powerful MaxSimil can be across a range of products, and we look forward to furthering our MaxSimil lutein trials to gain greater statistical power.

同樣，我們的試點 MaxSimil [葉黃素眼] 研究剛剛完成。該研究表明，補充 MaxSimil 葉黃素的那組人的眼部處方量似乎有所減少，而安慰劑組的眼部處方量有所增加。該研究還表明，MaxSimil 葉黃素補充劑有助於保持良好的認知健康。結果表明，與安慰劑相比，補充劑對認知有顯著影響。這項研究展示了 MaxSimil 在一系列產品中的強大功能，我們期待進一步開展 MaxSimil 葉黃素試驗以獲得更大的統計能力。

In closing, I want to emphasize that we understand the challenges that have impacted our business over the past year. We recognize that some changes have put pressure on our stakeholders, but we remain confident in our strategy and the direction we are headed. We are dedicated to delivering long-term value for all of our stakeholders and believe that our focus on our CPG brands, as evidenced by our strong Q3 results, is the right path forward. We are committed to continuing our efforts to streamline operations, manage expenses and expand our market share in the organic food and nutraceutical space despite the challenges of inflation and supply chain disruption.

最後，我想強調的是，我們了解過去一年中影響我們業務的挑戰。我們認識到一些變化給我們的利益相關者帶來了壓力，但我們仍然對我們的戰略和我們前進的方向充滿信心。我們致力於為我們所有的利益相關者提供長期價值，並相信我們對 CPG 品牌的關注，正如我們強勁的第三季度業績所證明的那樣，是正確的前進道路。儘管面臨通貨膨脹和供應鏈中斷的挑戰，我們仍致力於繼續努力精簡運營、管理費用並擴大我們在有機食品和營養保健品領域的市場份額。

Thank you for your continued support. And now over to Ray for a deeper dive into our financial results. Ray?

感謝您一如既往的支持。現在請 Ray 更深入地了解我們的財務業績。射線？

Thank you, Michael, and good afternoon, everyone. I am pleased to be able to report Neptune's financial results for the third quarter of fiscal year '23, the 3-month period ending December 31, 2022. Except as otherwise stated, all numbers in today's presentation are in U.S. dollars and U.S. GAAP.

謝謝邁克爾，大家下午好。我很高興能夠報告 Neptune 23 財年第三季度的財務業績，即截至 2022 年 12 月 31 日的三個月。除非另有說明，否則今天演示文稿中的所有數字均以美元和美國 GAAP 為單位。

Firstly, I would like to apologize to our shareholders and other stakeholders for the delay in reporting our Q3 earnings. The transition from Canadian dollar financial -- excuse me, functional currency to U.S. dollar functional currency, which we executed in the third quarter. Coming on top of our transition to U.S. dollars and U.S. GAAP earlier this fiscal year was the primary cause of these delays. As we go forward to the fiscal year-end close on March 31, we are bringing in additional accounting support, which will enable us to close on time in the future.

首先，對於延遲報告我們第三季度的收益，我想向我們的股東和其他利益相關者道歉。從加元金融——對不起，功能貨幣到美元功能貨幣的過渡，我們在第三季度執行。在本財年早些時候我們過渡到美元和美國公認會計原則是造成這些延誤的主要原因。在 3 月 31 日財政年度結束前，我們將引入額外的會計支持，這將使我們能夠在未來按時結束。

Turning to the numbers. Consolidated net sales for the third quarter totaled $12.2 million, down $2.5 million, a 17% decline as compared to the same period last year. This decrease was because we divested our cannabis business this quarter, and the impact was partially offset by growth in our remaining businesses. Excluding sales from the cannabis business in fiscal Q3 last year, this quarter's net sales increased 8.1% over the prior year due to strength in those core businesses, Sprout and Biodroga. Year-to-date, net sales amounted to $40.5 million, up 8.6% versus prior year and up 19.7% when cannabis sales in both this year and last are excluded. Strong growth in Sprout sales, which were up 29.4% year-to-date, was the major driver of this accomplishment.

轉向數字。第三季度合併淨銷售額總計 1220 萬美元，比去年同期下降 250 萬美元，下降 17%。這一下降是因為我們本季度剝離了大麻業務，其影響被我們剩餘業務的增長部分抵消了。不包括去年第三財季大麻業務的銷售額，由於核心業務 Sprout 和 Biodroga 的強勁表​​現，本季度的淨銷售額比上年增長 8.1%。年初至今，淨銷售額為 4050 萬美元，比上年增長 8.6%，如果不包括今年和去年的大麻銷售額，則增長 19.7%。 Sprout 銷售額的強勁增長（年初至今增長了 29.4%）是這一成就的主要推動力。

Gross profit for the third quarter of fiscal year '23 amounted to $1.88 million as compared to $1.65 million for the same period last year, while consolidated gross margins improved to 15.1% as compared to 11.3% last year. The major steps we have taken to refocus our cost and operating structure and become a pure-play CPG company have translated into margin growth, and we expect to see a positive impact on sales and earnings as we continue to scale our businesses and hopefully add new partnerships.

23 財年第三季度的毛利潤為 188 萬美元，而去年同期為 165 萬美元，而綜合毛利率從去年的 11.3% 提高到 15.1%。我們為重新調整成本和運營結構並成為一家純粹的 CPG 公司而採取的主要步驟已轉化為利潤率增長，隨著我們繼續擴大業務規模並希望增加新的業務，我們預計將對銷售和收益產生積極影響夥伴關係。

Looking now at Sprout, our organic children's food brand, in more detail. Net sales for Sprout totaled $8.4 million in Q3, an increase of 18% over the same period last year. Year-to-date, Sprout's net sales are up 23% as compared to the first 9 months of last year. The primary driving factors of this growth was Sprout's diversification into new products, primarily up-age meals, i.e., meals for older children, expansion of Sprout's distribution footprint at Walmart and a price increase in November.

現在更詳細地了解我們的有機兒童食品品牌 Sprout。 Sprout 第三季度的淨銷售額總計 840 萬美元，比去年同期增長 18%。年初至今，與去年前 9 個月相比，Sprout 的淨銷售額增長了 23%。這一增長的主要驅動因素是 Sprout 向新產品的多樣化，主要是年齡較大的兒童餐，Sprout 在沃爾瑪的分銷足跡擴大以及 11 月份的價格上漲。

Sprout reported gross margin of 5.7% for the third fiscal quarter, up 8.9 percentage points as compared to the negative margin of 3.2% we recorded last year. Gross margins have continued to improve each quarter in the current fiscal year, driven by higher sales volume and by price increases. Sprout continues to deliver versus a year ago, too, with increased market share, improved net sales and higher margins as compared to the same period last year.

Sprout 報告第三財季毛利率為 5.7%，比我們去年錄得的 3.2% 的負利率高出 8.9 個百分點。在銷量增加和價格上漲的推動下，本財年每個季度的毛利率都在持續提高。與去年同期相比，Sprout 也繼續交付，市場份額有所增加，淨銷售額有所提高，利潤率也有所提高。

Now to Biodroga, our nutraceutical co-manufacturing business. Biodroga's Q3 net sales totaled USD 3.6 million, a decrease of 11% as compared to the same period last year. Year-to-date in fiscal '23, however, net sales increased 6% versus the same period last year to $11.8 million. Q3's net sales decrease was mainly from customer-related timing and from supply chain issues. Biodroga has implemented price increases to mitigate higher supply chain and raw material costs, and the gross margins remained strong at 31%, up from 28.7% in the last sequential quarter.

現在轉到我們的營養保健品聯合製造業務 Biodroga。寶迪佳Q3淨銷售額為360萬美元，同比下降11%。然而，23 財年年初至今，淨銷售額與去年同期相比增長了 6%，達到 1180 萬美元。第三季度的淨銷售額下降主要來自與客戶相關的時間安排和供應鏈問題。 Biodroga 已實施提價以緩解較高的供應鍊和原材料成本，毛利率保持在 31% 的強勁水平，高於上一季度的 28.7%。

So turning back to the total P&L. Consolidated SG&A for the quarter amounted to $8.7 million as compared to $18.4 million for the same period the prior year, a reduction of $9.7 million or 52%. This reduction came primarily from headcount reductions in Sprout and corporate as well as from the removal of the overhead cost in the cannabis business that we sold last November. Year-to-date SG&A of $35.2 million was $14.7 million lower than for the same period last year, primarily for the same reasons. We have been focused on streamlining our operating expenses. And in the first 9 months this year, we have reduced our overall headcount by approximately 66%.

所以回到總損益。本季度綜合 SG&A 為 870 萬美元，上年同期為 1840 萬美元，減少 970 萬美元或 52%。這一減少主要來自 Sprout 和公司的裁員，以及我們去年 11 月出售的大麻業務的管理費用的取消。年初至今的 SG&A 為 3520 萬美元，比去年同期減少 1470 萬美元，主要原因是相同的。我們一直專注於精簡我們的運營費用。今年前 9 個月，我們的總人數減少了約 66%。

Q3 net loss of $497,000, contrast to a net loss of $16.8 million in the same quarter last year, an improvement of $16.6 million for the quarter. This sharp improvement was primarily due to the $9.6 million reduction in SG&A that we talked about earlier, but also from the $7.4 million gain in the value of derivatives, principally warrants issued in connection with new debt in the quarter. This came from the decline in our share price since the warrants were granted. Year-to-date, our net loss amounted to $44.3 million, an improvement from the $47.8 million loss for the prior year.

第三季度淨虧損 497,000 美元，與去年同期的淨虧損 1680 萬美元相比，本季度改善了 1660 萬美元。這一顯著改善主要是由於我們之前談到的 SG&A 減少了 960 萬美元，但也由於衍生品價值增加了 740 萬美元，主要是本季度與新債務相關的認股權證。這是因為自授予認股權證以來我們的股價下跌。年初至今，我們的淨虧損為 4,430 萬美元，比上一年的 4,780 萬美元虧損有所改善。

Diluted earnings per share attributable to equity holders was $0.06 per share in the third quarter, bringing the year-to-date figure to a loss of $4.04 a share. Note 13 of the financial statements explains the way in which our EPS is calculated in more detail.

第三季度股東應佔稀釋每股收益為 0.06 美元，年初至今每股虧損 4.04 美元。財務報表附註 13 更詳細地解釋了我們計算每股收益的方式。

Consolidated adjusted EBITDA loss for the third quarter is $4 million as compared to a $14.2 million loss for the same quarter last year, an improvement of $10.2 million. This was mainly the result of significantly improved net earnings and that gain on the fair market value of derivatives we talked about before. For the year-to-date, the consolidated adjusted EBITDA amounted to a loss of $29 million as compared to a loss of $40.5 million last year, an $11.5 million improvement, much of which occurred in the third quarter.

第三季度合併調整後的 EBITDA 虧損為 400 萬美元，而去年同期為虧損 1,420 萬美元，減少了 1,020 萬美元。這主要是由於淨收益顯著改善以及我們之前談到的衍生品公平市場價值的收益。今年迄今，合併調整後的 EBITDA 虧損 2900 萬美元，而去年虧損 4050 萬美元，改善了 1150 萬美元，其中大部分發生在第三季度。

Turning now to the balance sheet. We ended the quarter with $3.4 million of cash on hand and with trade and other receivables of $4.9 million. Net current assets amount to $63 million, including inventories of $16 million. Our current liabilities of $47.3 million includes loans and borrowings of $15.9 million.

現在轉向資產負債表。本季度結束時，我們手頭現金為 340 萬美元，貿易和其他應收賬款為 490 萬美元。淨流動資產為 6300 萬美元，包括 1600 萬美元的存貨。我們 4730 萬美元的流動負債包括 1590 萬美元的貸款和借款。

During the quarter, we took some actions to restructure our operations and improve our working capital position. As we've mentioned already, on November 9, 2022, we announced the complete divestment of our cannabis business for CAD 5.15 million in a cash sale. This was a significant milestone as the sale of our cannabis assets will enable us to realize significant cost savings and operational streamlining from redirected resources as well as a simplified corporate structure.

本季度，我們採取了一些行動來重組我們的業務並改善我們的營運資金狀況。正如我們已經提到的，2022 年 11 月 9 日，我們宣布以 515 萬加元的現金出售完全剝離我們的大麻業務。這是一個重要的里程碑，因為出售我們的大麻資產將使我們能夠通過重新定向資源以及簡化的公司結構實現顯著的成本節約和運營精簡。

By divesting the cannabis assets, we have also been able to build better relationships with investors, other corporations and banks, many of whom have restrictions against working with companies that own and/or operate cannabis businesses. This has already proved fruitful. We were able to close on a debt financing deal of $4 million and up to $5 million accounts receivable factoring facility in Sprouts and equity financing amounting to approximately $6 million. These were significant achievements that, combined with the cannabis asset sale proceeds, provided us with a much needed liquidity.

通過剝離大麻資產，我們還能夠與投資者、其他公司和銀行建立更好的關係，其中許多人限制與擁有和/或經營大麻業務的公司合作。這已經證明是卓有成效的。我們能夠在 Sprouts 完成 400 萬美元的債務融資交易和高達 500 萬美元的應收賬款保理融資，以及總計約 600 萬美元的股權融資。這些重大成就與大麻資產出售收益相結合，為我們提供了急需的流動性。

Our Q3 results demonstrate our commitment to executing on our strategic plan and becoming a CPG company. The sale of the cannabis business has enabled us to focus on our core growth drivers, Sprout, in particular, which is a vertical that can be scaled from revenue and streamlined for improved margins. The cannabis business represented an untenable regulatory environment that was built on the expectation of deregulation. And by divesting this business, we have removed some of the obstacles in our path to profitability.

我們第三季度的業績表明我們致力於執行我們的戰略計劃並成為一家 CPG 公司。大麻業務的出售使我們能夠專注於我們的核心增長動力，尤其是 Sprout，這是一個可以從收入中擴展並簡化以提高利潤率的垂直領域。大麻業務代表了一個建立在放鬆管制預期之上的難以維持的監管環境。通過剝離這項業務，我們消除了盈利道路上的一些障礙。

The numbers presented today at the start of the narrative, we anticipate, will prove out our business and financial strategy in the years to come. We currently still expect Sprout to achieve breakeven EBITDA by the end of fiscal '24.

我們預計，今天在敘述開始時提供的數字將證明我們未來幾年的業務和財務戰略。我們目前仍預計 Sprout 將在 24 財年末實現 EBITDA 收支平衡。

With that, operator, please, could you open the line for questions?

有了這個，接線員，你能打開問題熱線嗎？

(Operator Instructions) Your first question comes from Aaron Grey, Alliance Global Partners.

（操作員說明）您的第一個問題來自 Alliance Global Partners 的 Aaron Grey。

So first question for me. I just want to talk about Sprout business and some of the additional distribution points. Could you talk about potential impact you can expect fiscal 4Q versus fiscal 1Q of 2024? Any additional color on the additional doors you expect to have, how many SKUs will be showing through them and how to expect that to flow through the top line would be helpful.

所以我的第一個問題。我只想談談 Sprout 業務和一些額外的分銷點。您能否談談 2024 財年第四季度與第一季度的潛在影響？您期望的額外門上的任何額外顏色、將通過它們顯示多少 SKU 以及如何期望它流過頂線都會有所幫助。

We expect, obviously, the increase in our Walmart distribution to start rolling in, in Q4. We went from only around 900 stores to over 2,000 stores. And we've also started rolling out the innovations at the end of Q3 that is starting to be picked up by the fleet. So that will be continually growth.

顯然，我們預計我們的沃爾瑪分銷將在第四季度開始增加。我們從只有大約 900 家商店發展到 2,000 多家商店。我們還開始在第三季度末推出創新，這些創新開始被車隊採用。所以這將是持續增長。

Okay. All right. Great. And last quarter, you talked about some stock issues. I might have missed this in the early part of the call. I came on a bit late, but were you able to amend those stock issues in the quarter? And then were you able to improve those fill rates that you kind of mentioned in the last quarter? Could you provide any update on those fill rate numbers and how they've improved?

好的。好的。偉大的。上個季度，你談到了一些庫存問題。我可能在通話的早期就錯過了這一點。我來晚了一點，但你能在本季度修改那些股票問題嗎？然後你能提高你在上個季度提到的那些填充率嗎？您能否提供這些填充率數字的最新信息以及它們是如何改進的？

Yes. So we're in and around an 80% fill rate right now. We're still striving to increase that. Obviously, our goal is to get in eventually into the 90s and hopefully the high 90s. We did have some supply-related issues with the ingredients providers that does fluctuate on our ability and production. But we, as you can see, have ramped up inventory, and we've been working with our supply chain to be able to accomplish the launches of the retailers and expansions.

是的。所以我們現在的填充率大約為 80%。我們仍在努力增加這一點。顯然，我們的目標是最終進入 90 年代，並希望達到高 90 年代。我們確實與原料供應商有一些供應相關的問題，這些問題確實會影響我們的能力和生產。但是，正如您所看到的，我們已經增加了庫存，並且我們一直在與我們的供應鏈合作，以便能夠完成零售商和擴張的啟動。

Okay. Great. And then in terms of the innovation, just curious, as you think about how many SKUs you can have at potential retailers, how do you balance between keeping your core products on and then adding on new SKUs? And then any update in terms of how some of the CoComelon SKUs might be outperforming in any combined marketing tactics with CoComelon and Sprout?

好的。偉大的。然後在創新方面，很好奇，當您考慮潛在零售商可以擁有多少 SKU 時，您如何在保持核心產品和添加新 SKU 之間取得平衡？然後關於某些 CoComelon SKU 在與 CoComelon 和 Sprout 的任何組合營銷策略中如何表現出色的任何更新？

Yes. So our first goal was to make sure that we got the footprint in. Now we've started expanding doors. So as we've mentioned, we're around like 5% of the potential of what doors and retailers that we're in. And we do -- right now, our focus has been really on scaling in a couple of areas, our up-age meals, which started to roll out, our toddler meals, which are performing very well, as well as expanding our footprint on our existing core SKUs.

是的。所以我們的第一個目標是確保我們得到足跡。現在我們已經開始擴大門。因此，正如我們所提到的，我們大約有 5% 的潛力是我們所處的門和零售商的潛力。而且我們做到了——現在，我們的重點實際上是在幾個領域進行擴展，我們的開始推出的成人餐，我們的幼兒餐表現非常好，並擴大了我們現有核心 SKU 的足跡。

We are trying to streamline it in a way that we're focusing on SKUs that drive the highest revenue while also positive to our gross profit margin. So we have prioritized it based on our supply chain and margins on the SKUs that we're entering into. And we've also looked at reducing SKUs that may not be picked up in the fleet that don't have the potential to grow as fast.

我們正試圖以一種我們專注於推動最高收入同時也對我們的毛利率產生積極影響的 SKU 的方式來簡化它。因此，我們根據我們的供應鍊和我們正在進入的 SKU 的利潤率對其進行了優先排序。我們還研究了減少可能無法在沒有快速增長潛力的車隊中提取的 SKU。

CoComelon has been very key to our partnerships because it's opened up doors and the velocities. Like the only other peer in our space has like a Sesame Street license. And CoComelon has already shown that it's performing way better than the Sesame Street license. And so we are expanding that. Our up-age meals is something that we're really focused on because it gives us a lot of opportunity.

CoComelon 一直是我們合作夥伴關係的關鍵，因為它打開了大門和速度。就像我們空間中唯一的其他同行一樣擁有芝麻街許可證。 CoComelon 已經證明它的表現比芝麻街許可證要好得多。所以我們正在擴大它。我們真正關注的是我們的超齡膳食，因為它給了我們很多機會。

Currently, if you look at the baby food aisle in most grocery stores, you'll see about 50% of it being organic. With up-age meals, only about 10% of it is organic. So we are able to get in and partner with these retailers to really expand the footprint, and that's where we're starting to roll out our up-age meals, which are also a much higher-margin product.

目前，如果您觀察大多數雜貨店的嬰兒食品貨架，您會發現其中約 50% 是有機食品。對於超齡食品，只有大約 10% 是有機食品。因此，我們能夠進入並與這些零售商合作，以真正擴大足跡，這就是我們開始推出成人餐的地方，這也是一種利潤率更高的產品。

Okay. All right. Great. That was helpful. And then lastly, maybe more a question for Ray. Some gross margin improvement that we talked about in the prepared remarks, how best to think about the gross margin in the near to medium term?

好的。好的。偉大的。那很有幫助。最後，也許更多的是 Ray 的問題。我們在準備好的評論中談到了一些毛利率的改善，如何最好地考慮中短期內的毛利率？

We continue to see margin improvement, and we're still seeing the effect of pricing that we've taken on both Sprout and Biodroga. So I think we see continued growth in the margin. And we're very -- as Michael said, the mix of products in Sprout is shifting to be slightly more margin accretive. And the same is true in Biodroga, too. The MaxSimil product lines are significantly more profitable on the gross margin level than the other lines that Biodroga makes and sells.

我們繼續看到利潤率提高，我們仍然看到我們對 Sprout 和 Biodroga 採取的定價的影響。所以我認為我們看到利潤率持續增長。我們非常 - 正如邁克爾所說，Sprout 的產品組合正在轉變為略微增加利潤。 Biodroga 也是如此。 MaxSimil 產品線的毛利率水平明顯高於 Biodroga 生產和銷售的其他產品線。

Thank you. There are no further questions at this time. Ladies and gentlemen, we thank you for your participation, and we ask that you please disconnect your lines at this time.

謝謝。目前沒有其他問題。女士們，先生們，我們感謝您的參與，我們請您在此時斷開您的線路。

Thanks, everyone.

感謝大家。