Neptune Wellness Solutions Inc (NEPT) 2024 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Neptune Wellness Solutions Inc second quarter 2023 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Valter Pinto, Managing Director, KCSA. Please go ahead.

早安，女士們、先生們，歡迎參加海王星健康解決方案公司 2023 年第二季財報電話會議。 （操作員指示）我現在想將會議轉交給 KCSA 董事總經理 Valter Pinto。請繼續。

Thank you, operator, and hello, everyone. Thank you for joining us today for the Neptune Wellness Solutions' fiscal second quarter 2024 earnings conference call. With me today are Michael Cammarata, President and Chief Executive Officer; Lisa Gainsborg, Interim Chief Financial Officer; Nicki Pacheco, President of Sprout Organics; Cedrick Billequey, President of Biodroga Nutraceuticals.

謝謝接線員，大家好。感謝您今天參加我們 Neptune Wellness Solutions 的 2024 年第二財季財報電話會議。今天與我在一起的有總裁兼執行長 Michael Cammarata；甘斯伯格 (Lisa Gainsborg)，臨時財務長； Nicki Pacheco，Sprout Organics 總裁； Cedrick Billequey，寶迪佳營養品公司總裁。

All amounts discussed today are in US dollars. And our remarks may contain forward-looking information. We are presenting our expectations as of today and maybe 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。我們的言論可能包含前瞻性資訊。我們目前提出的是我們的期望，可能會改變。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，而這些趨勢在僅依靠 GAAP 財務指標時可能不明顯。

[Neptune] also uses adjusted EBITDA in order to facilitate our operating performance comparisons from period to period, prepare annual operating budget, and assess our ability to meet our capital expenditure during 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 maybe limited. Non-GAAP measures should not be considered a substitution for/or in isolation measures prepared in accordance with GAAP.

[Neptune] 也使用調整後的 EBITDA 來促進我們不同時期的經營績效比較、準備年度經營預算，並評估我們在營運資本需求期間滿足資本支出的能力。調整後 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（包括我們的同業）所使用的定義不同，因此可比性可能有限。非公認會計原則措施不應被視為替代/或孤立根據公認會計原則制定的措施。

Investors are encouraged to review our financial statement and disclosures in their entirety and are cautioned not to put undue reliance on non-GAAP measures and view them a conjunction with the most comparable GAAP financial measures. We do not undertake any obligation to update any forward-looking statement except as maybe required by the Canadian or US securities laws. Assumptions were made in preparing these forward-looking statements, which are subject to risks as laid down in our public filings from SEDAR and EDGAR. I would now like to turn the call over to Michael.

我們鼓勵投資者全面審查我們的財務報表和披露信息，並告誡投資者不要過度依賴非公認會計原則衡量標準，並將其與最具可比性的公認會計原則財務衡量標準結合起來。除加拿大或美國證券法要求外，我們不承擔更新任何前瞻性聲明的義務。在準備這些前瞻性陳述時做出了一些假設，這些假設會受到 SEDAR 和 EDGAR 公開文件中規定的風險的影響。我現在想把電話轉給麥可。

Thank you, Valter, and hello, everyone. I appreciate your participation in today's conference call to discuss Neptune's fiscal second quarter 2024 results ending September 30, 2023. Our conversation today centres on both financial and operational developments. First and foremost, we wish to highlight Neptune's strategic evolution. Our dedication to guiding the comapny through a transformative phase is both strong and deliberate.

謝謝你，瓦爾特，大家好。感謝您參加今天的電話會議，討論海王星截至 2023 年 9 月 30 日的 2024 年第二財季業績。我們今天的談話重點是財務和營運發展。首先，我們希望強調海王星的戰略演變。我們致力於引導公司度過轉型階段，這既是堅定的又是深思熟慮的。

As we approach the completion of our strategic review, we have made critical decisions that resonated with the best interest of our stakeholders. A pivotal aspect of this strategy is the Board's approval of a significant restructuring, the spin out of our equity interest in Sprout Subject to shareholder consent and specific conditions, Neptune plans to redistribute most of its Sprout equity to our current shareholders retaining an approximate 10% to 15% interest. This strategic move follows our agreement with Morgan Stanley to convert our Sprout stat into equity. This endeavor aims to empower Sprout to operate independently unlocking its full potential.

當我們接近完成策略審查時，我們做出了符合利害關係人最佳利益的關鍵決策。這項策略的一個關鍵方面是董事會批准一項重大重組，即剝離我們在Sprout 的股權。根據股東同意和特定條件，Neptune 計劃將其大部分Sprout 股權重新分配給我們現有的股東，保留約10 % 的股份至 15% 的利息。這項策略舉措是在我們與摩根士丹利達成協議將我們的 Sprout 統計數據轉換為股權之後做出的。這項努力旨在使 Sprout 能夠獨立運營，釋放其全部潛力。

Simultaneously, Biodroga, our esteemed nutraceutical brand continues to be a vital part of Neptune's portfolio. We are committed to strengthening our role as the preferred partner for retailers and CPG companies in the competitive dietary supplements industry.

同時，我們備受推崇的營養保健品品牌寶迪佳 (Biodroga) 仍然是 Neptune 產品組合的重要組成部分。我們致力於加強我們作為零售商和 CPG 公司在競爭激烈的膳食補充劑行業的首選合作夥伴的角色。

This anticipated spinout is a strategic initiative to streamline Neptune's operational costs and minimize our debt exposure, thereby bolstering our financial strength and enhancing cashflow. We will keep you updated as we finalize the specifics of this transaction. I encourage our shareholders to understand the strategic importance of the Sprout spinout. Your support is crucial in strategically repositioning both Neptune and Sprout for enduring growth and success.

這項預期的分拆是一項策略性舉措，旨在簡化海王星的營運成本並最大限度地減少我們的債務風險，從而增強我們的財務實力並增強現金流。當我們最終確定本次交易的具體細節時，我們將及時向您通報最新情況。我鼓勵我們的股東了解 Sprout 分拆的策略重要性。您的支援對於對 Neptune 和 Sprout 進行策略性重新定位以實現持久成長和成功至關重要。

In recognizing our financial journey, we have made significant strides in fortifying our position, yet there remain more to accomplish. The recent conversion of Neptune's debt in Sprout to equity is a strategic turning point, increasing our ownership stake from 50.1% to about 80.9%.

在認識到我們的財務歷程時，我們在鞏固我們的地位方面取得了重大進展，但仍有更多工作要做。最近，Neptune 在 Sprout 的債務轉為股權，這是一個策略轉捩點，將我們的持股比例從 50.1% 增加到約 80.9%。

This move not only enhances the strategic positioning of both entities, but also reduces financial burden paving the way for Sprout's independent operation subject to required consent. Moreover, we have proactively settled our obligation with CCUR Holdings Incorporated and Symbolic Logic Incorporated by prepaying our senior secured notes. This decisive step significantly reduced our annual interest expense.

此舉不僅增強了兩個實體的策略定位，還減輕了財務負擔，為 Sprout 在必要的情況下獨立營運鋪平了道路。此外，我們也透過預付我們的優先擔保票據，主動履行了與 CCUR Holdings Incorporated 和 Symbolic Logic Incorporated 的義務。這一決定性的步驟大大減少了我們的年度利息支出。

As we delve into a detailed financial analysis, I will first pass the floor to Nicki Pacheco, President of Sprout Organics. Following Nicki, Cedrick Billequey will provide an insight into Biodroga's performance, and then Lisa Gainsborg, our Interim CFO will wrap up before we open the floor for question.

當我們深入研究詳細的財務分析時，我將首先請 Sprout Organics 總裁 Nicki Pacheco 發言。繼 Nicki 之後，Cedrick Billequey 將深入介紹 Biodroga 的業績，然後我們的臨時財務長 Lisa Gainsborg 將在我們開始提問之前總結。

Lastly, I want to address the inherent risks and opportunities ahead. As always, business endeavors carry inherent risks, and we are actively evaluating these as part of our strategic planning. In parallel, we are exploring opportunities for acquisitions with the support of Morgan Stanley to bolster both Neptune and Sprouts' market position. Stay tuned for more updates in this exciting phase of our journey.

最後，我想談談未來固有的風險和機會。像往常一樣，業務活動帶有固有風險，我們正在積極評估這些風險，作為我們策略規劃的一部分。同時，我們正在摩根士丹利的支持下探索收購機會，以鞏固 Neptune 和 Sprouts 的市場地位。請繼續關注我們這趟令人興奮的旅程階段的更多更新。

Thanks, Michael. During the second quarter, Sprout continued to develop innovative new SKUs to expand our addressable market, broaden our distribution growth, and strengthen our supply chain management and expense control. Building on significant changes made over the recent quarters, Sprout further bolstered its supply chain, inventory management, and accounting processes in Q2. We expect these measures to reduce the inventory write-offs that we experienced in Q4 and achieve significant savings of over $2 million for the rest of the calendar year of 2023.

謝謝，麥可。第二季度，Sprout 繼續開發創新的新 SKU，以擴大我們的目標市場，擴大我們的分銷成長，並加強我們的供應鏈管理和費用控制。在最近幾季發生的重大變化的基礎上，Sprout 在第二季進一步加強了其供應鏈、庫存管理和會計流程。我們預計這些措施將減少第四季的庫存沖銷，並在 2023 年剩餘時間實現超過 200 萬美元的大幅節省。

While we have seen the results in the operational improvements already, we are focused on further reducing and streamlining supply chain and inventory management further, as there are still gains to be made. Sprout has also recently extended the shelf life on all pouch products. Following conclusive research, we also aim to apply this across the snack category. This will help reduce waste on products that are still fresh and further alleviate inventory management pressures.

雖然我們已經看到了營運改善的成果，但我們仍將重點放在進一步減少和簡化供應鏈和庫存管理上，因為仍有許多成果有待實現。 Sprout 最近也延長了所有袋裝產品的保質期。經過結論性研究後，我們也打算將其應用於整個零食類別。這將有助於減少新鮮產品的浪費，並進一步緩解庫存管理壓力。

During the second quarter, Sprout continued to work with our retail partners to optimize product assortment on shelf with the goal of driving sales and brand awareness. Some key initiatives that we focused on with our customers included shelf placement of key Sprouts products and targeted marketing activation.

第二季度，Sprout 繼續與我們的零售合作夥伴合作，優化貨架上的產品種類，以提高銷售量和品牌知名度。我們與客戶共同關注的一些關鍵舉措包括關鍵豆芽產品的貨架放置和有針對性的行銷活化。

I'm proud to report that Sprout products are now available in 90% of the market in all 50 US states, Canada, and are also shipping direct to consumers through the Sprout website. These statistics are remarkable, especially, considering when Neptune acquired majority of the stake of Sprout in 2021, Sprout had only market coverage of just 50%.

我很自豪地向大家報告，Sprout 產品現已在美國所有 50 個州和加拿大 90% 的市場上銷售，並且還透過 Sprout 網站直接向消費者發貨。這些統計數據非常引人注目，特別是考慮到 Neptune 在 2021 年收購 Sprout 的大部分股權時，Sprout 的市場覆蓋率僅為 50%。

Looking at store count, Sprouts has reached nearly 29,000 doors in the United States and 30,000 doors in Canada for a total of 32,000 doors in North America. This reach had been achieved through our significant partnership with our leading retailers such as Walmart and Target, major supermarket chains and both of the largest national pharmacy chains in the United States.

從門市數量來看，Sprouts 在美國的門市數量已接近 29,000 家，在加拿大的門市數量已達 30,000 家，北美地區的門市總數為 32,000 家。這一影響力是透過我們與沃爾瑪和塔吉特等領先零售商、大型連鎖超市以及美國最大的全國性藥房連鎖店的重要合作夥伴關係實現的。

In Q2, Sprout continued to build upon current distribution through new and existing retail partnerships, including new partnerships such as [windcoal and statemarks] and the addition of new items and door count increases with Publix.

第二季度，Sprout 繼續透過新的和現有的零售合作夥伴關係（包括[windcoal 和statemarks] 等新合作夥伴關係）以及與Publix 增加新商品和增加門數等方式，在現有分銷的基礎上發展。

Through Sprouts' partnership with Walmart, Sprout products continue to perform well in the second quarter. CoComelon pouches continue to perform well and were on a feature in Walmart stores from the last week of July, achieving a 40% lift in sales over the 11 weeks to the end of September. Sprouts' product line is an approximately 2,300 stores and a total of 10 items, including CoComelon pouches, CoComelon banana bars, CoComelon waffles, CoComelon corals, and Sprout toddler meal.

透過Sprouts與沃爾瑪的合作，Sprout產品在第二季持續表現良好。 CoComelon 袋裝繼續表現良好，從 7 月最後一周開始成為沃爾瑪商店的特色產品，在截至 9 月底的 11 週內銷售額增長了 40%。 Sprouts 的產品線約有 2,300 家商店，共有 10 種商品，包括 CoComelon 袋裝、CoComelon 香蕉棒、CoComelon 華夫餅、CoComelon 珊瑚和 Sprout 幼兒餐。

Earlier in the year, we announced that for Sprouts was popular CoComelon co-branded organic toddler pouches had been selected for distribution by Target. These items are now available on shelves in stores across the country as well as Target.com.

今年早些時候，我們宣布 Target 已選擇針對 Sprouts 廣受歡迎的 CoComelon 聯合品牌有機幼兒袋進行分銷。這些商品現已在全國各地商店以及 Target.com 的貨架上出售。

In Q2, Sprout expanded its portfolio with Target through the addition of our popular PBNAs and peanut butter puffs. The latest Nielsen data shows that some of the new Sprout products are beating average performance in their category.

第二季度，Sprout 透過添加我們廣受歡迎的 PBNA 和花生醬泡芙，擴大了與 Target 的產品組合。尼爾森的最新數據顯示，一些新的 Sprout 產品的表現超出了同類產品的平均水平。

In particular, Sprout toddler meals and bars are performing impressively. The toddler milk category recorded 24.3% growth over the recent 13-week period, while bars doubled in sales versus the prior 13-week time frame. This continues to verify that Sprout's strategic expansion into additional baby and toddler categories was the right decision for Sprouts and in line with shifting customer demand.

尤其是 Sprout 幼兒餐和酒吧的表現令人印象深刻。幼兒奶類別在最近 13 週內增長了 24.3%，而巧克力棒的銷量與之前 13 週內的銷量相比翻了一番。這繼續證明 Sprout 向其他嬰幼兒類別的策略擴張對於 Sprout 來說是正確的決定，並且符合不斷變化的客戶需求。

I also want to highlight our CoComelon partnership. Those products continue to perform a standout in the Sprout's range nationally. The CoComelon banana snack bar is number one in dollar and unit sales in the CoComelon snack portfolio, while the Yes, Yes, Veggie Pouch has maintained the number one pouch in dollar and unit sales in Sprout CoComelon portfolio. Building on our success in expansion into recent quarter, Sprouts is focused on developing innovative new SKU lines and growing our total addressable market outside of the baby food and in the older children, snacks, and meals.

我還想強調一下我們與 CoComelon 的合作關係。這些產品在 Sprout 的全國範圍內繼續表現出色。 CoComelon 香蕉零食棒在 CoComelon 零食產品組合中以美元和單位銷量排名第一，而 Yes, Yes, Veggie Pouch 在 Sprout CoComelon 產品組合中以美元和單位銷量排名第一。在我們最近一個季度成功擴張的基礎上，Sprouts 專注於開發創新的新 SKU 系列，並擴大嬰兒食品和年齡較大的兒童、零食和膳食之外的整體潛在市場。

We are working on reallocating investments to areas that will help support future growth in areas that our research has identified as high demand categories. We have taken learnings from where we have seen particular success in the market with new products and are seeking to build upon this success trajectory further. Sprout forward to releasing innovative new SKUs in most product lines in the coming quarters.

我們正在努力將投資重新分配到有助於支持我們的研究確定為高需求類別的領域的未來成長的領域。我們從新產品在市場上的特別成功中吸取了教訓，並尋求進一步鞏固這一成功軌跡。 Sprout 預計在未來幾季在大多數產品線中發布創新的新 SKU。

Next I'll turn the call over to Cedrick to go into more detail on Neptune's other business segment Biodroga, our leading B2B nutraceuticals brand.

接下來，我將把電話轉給 Cedrick，詳細介紹 Neptune 的其他業務部門 Biodroga（我們領先的 B2B 營養保健品品牌）。

Thank you, Nicki.

謝謝你，尼基。

Over the second fiscal quarter, Biodroga sales showed a strong rebound in growth compared to Q1. This was mainly driven by repeat orders of MaxSimil or proprietary fish oil, particularly, from customers in our new market of South Korea. Biodroga also experienced strong demand for tubal soft gel technology products intended for kids, sales of which have picked up heavily in Asian markets. Biodroga was able to capitalize on a market shortage of tubal soft gel in Asia and has gained market share while cutting production lead times to ensure on-time stock replenishment for our customer.

在第二財季，寶迪佳的銷售額較第一季出現強勁反彈。這主要是由於 MaxSimil 或專有魚油的重複訂單，特別是來自我們韓國新市場的客戶的訂單。寶迪佳也經歷了針對兒童的輸卵管軟凝膠技術產品的強勁需求，其銷售量在亞洲市場大幅回升。寶迪佳能夠利用亞洲輸卵管軟膠囊市場短缺的機會，贏得市場份額，同時縮短生產週期，確保為我們的客戶及時補充庫存。

Margins over the second quarter was stable from last quarter. We've continued to implement operational streamlining to achieve cost cutting across Biodroga, which has delivered strong margins for several consecutive quarters.

第二季的利潤率與上季相比保持穩定。我們繼續實施營運精簡，以實現寶迪佳的成本削減，該公司已連續幾季實現了強勁的利潤率。

In addition, the measures we have executed to diversify our supply chain management have mitigated the challenges currently being experienced across the industry, which are causing raw material price increases. Biodroga has managed to successfully achieve the partial offsetting of raw material prices by adopting an aggressive inventory position on several key raw materials.

此外，我們為實現供應鏈管理多元化而採取的措施緩解了整個產業目前面臨的導致原物料價格上漲的挑戰。寶迪佳對幾種關鍵原物料採取積極的庫存立場，成功實現了原物料價格的部分抵銷。

Biodroga is also expanding its market presence internationally, which is subsequently growing its total addressable market and revenue potential. As previously mentioned, we have recently expanded into the Asian market, with South Korea now established as a significant market for our MaxSimil technology. We are also currently in progress discussions with Taiwan and Singapore, as well as finalizing logistic details with our Indian partners to facilitate the importation of our MaxSimil products.

寶迪佳也在國際上擴大其市場份額，從而擴大其總目標市場和收入潛力。如前所述，我們最近擴展到亞洲市場，韓國現已成為我們 MaxSimil 技術的重要市場。我們目前也正在與台灣和新加坡進行討論，並與印度合作夥伴敲定物流細節，以促進 MaxSimil 產品的進口。

Our current customer in Mexico continues to develop the market for MaxSimil and increase its demand. This growth is continuing to follow an uptrend in demand over the past six months, which saw this customer quadruple its business orders for MaxSimil. We look forward to further increasing the top line contribution coming from Asian and Latin American markets in the coming quarters.

我們目前在墨西哥的客戶繼續開發 MaxSimil 的市場並增加其需求。這種成長是隨著過去六個月需求的上升趨勢而持續的，該客戶的 MaxSimil 業務訂單增加了四倍。我們期待在未來幾季進一步增加來自亞洲和拉丁美洲市場的營收貢獻。

And with that, I'll turn the call over to Lisa for a review of our financial results.

接下來，我會將電話轉給麗莎，以審查我們的財務表現。

Thank you, Cedric, and hello, everyone. I'm pleased to be presenting Neptune's financial results for the second quarter of fiscal '24 for the period ending September 30, 2023. All numbers are in US dollars and US GAAP.

謝謝你，塞德里克，大家好。我很高興介紹海王星截至 2023 年 9 月 30 日的 24 財年第二季的財務業績。所有數據均以美元和美國公認會計準則為單位。

Consolidated net revenue for our Q2 fiscal year 2024 totaled $8.7 million, a decrease of $3.2 million compared to $12 million for Q2 of fiscal 2023. Food and beverage revenue decreased $2.8 million in comparison to the three months ended September 30, 22, and nutraceutical revenue has represented a decrease of $0.2 million when compared to the three-month period ended September 30, 2020, which was primarily due to timing as nutraceutical B2B sales are not quarterly linear. In addition, there was a decrease of $0.1 million in cannabis revenues from the now divested cannabis business.

2024 財年第二季的合併淨收入總計870 萬美元，比2023 財年第二季的1,200 萬美元減少了320 萬美元。與截至9 月30 日、22 日的三個月相比，食品和飲料收入減少了280 萬美元，營養保健品收入減少與截至2020 年9 月30 日的三個月期間相比，減少了20 萬美元，這主要是由於營養保健品B2B 銷售的時間安排不是季度線性的。此外，現已剝離的大麻業務的大麻收入減少了 10 萬美元。

The consolidated gross loss for the three-month period ended September 30, 2023, amounted to $0.6 million compared to a $1.1 million gross profit for Q2 fiscal year '23, a decrease of $1.7 million due to reduction of revenues offset by the reduction in cost of sales. As Michael has already spoken to, the key factors of our cost savings are the management of our inventory. We have put the right people and processes in place to ensure that we do not experience the write-off that we had in prior quarters, and we are continuing to actively manage this.

截至2023 年9 月30 日的三個月期間的綜合毛虧損為60 萬美元，而23 財年第二季的毛利為110 萬美元，減少了170 萬美元，原因是收入減少被成本減少所抵銷的銷售量。正如邁克爾已經談到的，我們節省成本的關鍵因素是庫存管理。我們已經安排了合適的人員和流程，以確保我們不會經歷前幾季的沖銷，並且我們正在繼續積極管理這一點。

We have taken several steps throughout Sprouts business over the past year to manage costs. We expect to see full savings from these measures recorded in Q3. We have also refined our accounting processes to ensure tracking and forecasting systems for more detailed and more efficient at understanding customer needs.

去年，我們在豆芽業務中採取了多項措施來管理成本。我們預計這些措施將在第三季實現全額節省。我們也完善了會計流程，以確保追蹤和預測系統能夠更詳細、更有效地了解客戶需求。

Moving to our B2B nutraceutical segment, including our leading brand Biodroga. We have also continued to implement cost savings initiatives and improved operational streamlining throughout Biodroga business. This is one of the key factors behind the margin growth we have maintained as well as reduced cost of sales.

轉向我們的 B2B 營養保健品領域，包括我們的領先品牌 Biodroga。我們也持續實施成本節約措施並改善整個 Biodroga 業務的營運精簡。這是我們維持利潤成長以及銷售成本降低的關鍵因素之一。

Moving now to corporate. Consolidated SG&A expenses for fiscal Q2 2024 amounted to $3.8 million compared to $15.9 million for the same period the prior year. This is a decrease of $12.1 million, primarily due to the benefit of strategic review and continued cost controls. We remain focused on improving our balance sheet and operating cost structure. As Michael has spoken to, we recently effectively converted a substantial portion of Neptune Sprout debt into strap equity.

現在轉向公司。 2024 年第二財季的綜合銷售、管理和行政費用為 380 萬美元，而去年同期為 1,590 萬美元。減少了 1,210 萬美元，主要是由於策略審查和持續成本控制的好處。我們仍然專注於改善我們的資產負債表和營運成本結構。正如邁克爾所說，我們最近有效地將 Neptune Sprout 債務的很大一部分轉換為帶股。

In accordance with the terms of the exchange option announced in August of '23, stock that was successfully exchanged for strap equity, resulting in Neptune having increased our ownership from 50.1% to approximately 89.5%. The debt exchange will significantly improve the strategic positioning for both entities, decreasing expenses, removing Neptune as guarantor for Sprouts promissory notes, and subject to third-party consents, Sprout becoming the independent trading entity.

根據2023年8月宣布的交換選擇權條款，股票成功交換為帶股股權，導致海王星將我們的所有權從50.1%增加到約89.5%。此次債務交換將顯著改善兩個實體的戰略定位，減少開支，取消 Neptune 作為 Sprout 本票擔保人的地位，並在第三方同意的情況下，Sprout 成為獨立的貿易實體。

In October, we also announced we had prepaid in full the company's senior secured notes with CCUR Holdings Inc and symbolic logic Inc, after payment of approximately $2.3 million. The senior secured notes had original principal amount of $4 million and for a fixed interest rate of 16.5% per annum. Additionally, during the second quarter, Neptune closed a public offering of $4.5 million.

10 月份，我們還宣布，在支付了約 230 萬美元後，我們已全額預付了 CCUR Holdings Inc 和 symboliclogic Inc 的公司優先擔保票據。優先擔保票據的原始本金為 400 萬美元，固定年利率為 16.5%。此外，Neptune 在第二季完成了 450 萬美元的公開發行。

Consolidated adjusted EBITDA loss for the three-month period ended September 30, 2023, increased by $10.5 million to an adjusted EBITDA loss of $3.2 million, compared to $13.7 million for the three-month period ended September 30, 2022. The change in adjusted EBITDA loss was driven by an improvement in loss from operating activities of $32.2 million, a reduction of impairment losses of $24.6 million, offset by an add-back of SG&A expenses including depreciation, equity classified stock-based comp, non-employee compensation related to warrants of $3.1 million.

截至2023年9月30日止三個月期間的合併調整後EBITDA 虧損增加了1,050 萬美元，調整後EBITDA 虧損為320 萬美元，而截至2022 年9 月30 日止三個月期間為1,370 萬美元。調整後EBITDA 的變化虧損的原因是經營活動虧損改善了3220 萬美元，減值損失減少了2460 萬美元，但被SG&A 費用的加回所抵消，其中包括折舊、股權分類股票補償、與認股權證相關的非員工薪酬310萬美元。

To sum up, we are focused on reducing corporate costs and the expenses to achieve additional cost savings and operational improvements. We also remain focused on improving Neptune's capital position and are continuing to review options to shore up capital.

總而言之，我們專注於降低企業成本和開支，以實現額外的成本節約和營運改善。我們也持續致力於改善海王星的資本狀況，並持續檢視支撐資本的方案。

That concludes my prepared remarks. I will now turn the call back over to Michael.

我準備好的發言就到此結束。我現在將把電話轉回給邁克爾。

Thank you, Lisa. In closing, we anticipate the proposed changes to positively impact Neptune. I appreciate our stakeholder's support and look forward to your consideration of the Sprouts spinout proposal. I will now hand the call over to the operator. Thank you.

謝謝你，麗莎。最後，我們預計擬議的變更將對海王星產生正面影響。我感謝利害關係人的支持，並期待您考慮 Sprouts 分拆提案。我現在將把電話轉交給接線員。謝謝。

(Operator Instructions)

（操作員說明）

Aaron Grey, Alliance Global.

亞倫·格雷，全球聯盟。

Hey, how is everything going on? Thanks for the questions here. First question for me is one on holistic view, right? So talk about how you're kind of looking at everything going forward. So it's kind of in layman's terms now, so you're looking to kind of spinout in the Sprouts (inaudible) and on the other side here for Neptune, Biodroga and then you mentioned potential acquisitions. So talk about the strategies there, potential with the two separate entities? Thanks.

嘿，一切怎麼樣？感謝您在這裡提出的問題。我的第一個問題是關於整體觀點的，對吧？那麼請談談您如何看待未來的一切。所以現在用外行人的話來說，你正在尋找 Sprouts 的分拆（聽不清楚），而另一邊的 Neptune、Biodroga，然後你提到了潛在的收購。那麼談談這兩個獨立實體的策略和潛力嗎？謝謝。

Thanks, Aaron. It's Michael, I'll take that question. We're basically looking at how to optimize our positions with our current assets. And the goal with Sprouts is really to enable growth and be more agile, to be able to really jump into the opportunities as we're seeing demand shifting Internet areas, and we're expanding in snacks, and the market's giving us some opportunities. And we really want to be able to allow our shareholder bases to really get hyper focus.

謝謝，亞倫。我是邁克爾，我來回答這個問題。我們基本上正在研究如何利用現有資產來優化我們的部位。 Sprouts 的目標實際上是實現成長並變得更加敏捷，能夠真正抓住機遇，因為我們看到網路領域的需求發生變化，我們正在零食領域擴張，市場給了我們一些機會。我們真的希望能夠讓我們的股東群體真正獲得高度關注。

So allowing our CPG investors to really double down into Sprout. And it's building that platform out, so we can acquire other brands and grow them. And taking advantage of an opportunity, we believe, that the market has shifted in the CPG landscape that the strategics who are looking for larger companies. And so there's a lot of midsized brands that historically would have been acquired by a strategics that we can actually partner with and use that footprint that we've built out with Sprouts to grow those brands and then potentially, strategically partner with some of the strategics on them.

因此，我們的 CPG 投資者可以真正加倍投資 Sprout。它正在建立這個平台，這樣我們就可以收購其他品牌並發展它們。我們相信，利用這個機會，消費品市場的格局已經發生了變化，策略制定者正在尋找更大的公司。因此，歷史上有許多中型品牌會被策略公司收購，我們實際上可以與之合作，並利用我們與 Sprouts 建立的足跡來發展這些品牌，然後有可能與一些策略公司進行策略合作。

And then with Biodroga, we've started expanding international and also, adding in different technologies and it's really hyper focused. It has huge customers that are already major CPG globally such as like Nestle's, with launch that's different all across the board. We wanted to really unlock growth and give them more tools that we can partner with those brands on. So not just the formulation and delivery. And I think it's a very unique position that Biodroga is in, because a lot of retailers in the US, their minimum order is at 250,000 units. And they've been looking for opportunities to buy products like at a 10,000 unit minimum.

然後，透過Biodroga，我們開始向國際擴張，並添加不同的技術，這確實是高度集中的。它擁有龐大的客戶，這些客戶已經是全球主要的消費品，例如雀巢，其推出的產品全面不同。我們希望真正釋放成長潛力，並為他們提供更多我們可以與這些品牌合作的工具。所以不僅僅是配方和交付。我認為寶迪佳所處的位置非常獨特，因為美國的許多零售商的最低訂單量為 250,000 件。他們一直在尋找機會購買至少 10,000 件的產品。

So Biodroga, we are getting hyper-focused on, really double down on the B2B, offering additional services and technology to support that business and those companies, but also be able to enter into the retailers and be able to say, hey, we can offer you vitamins and nutraceutical products. And have with a prior person haven't had 250,000 minimum orders, we can do 10,000 minimum orders. So it's a very dynamic and efficient way to be able to deliver products to our partners.

因此，Biodroga 非常專注於 B2B，提供額外的服務和技術來支持該業務和這些公司，但也能夠進入零售商並能夠說，嘿，我們可以為您提供維生素和營養保健品。而且之前的人還沒有250,000個最低訂單，我們可以做10,000個最低訂單。因此，這是一種非常動態且高效的方式來向我們的合作夥伴交付產品。

So we wanted to really give the opportunity to expand Biodroga as we -- when we started this journey, Biodroga had a negative profitable stat. Now it's highly profitable and growing, and we're seeing the demand all over the world, and we are also seeing the request from retailers to do private label. And so we're going to be expanding that and really want to give that an opportunity for success, at the same time, looking at the cost structure on how do we optimize best below the overall SG&A.

因此，我們希望真正提供擴大 Biodroga 的機會，因為當我們開始這一旅程時，Biodroga 的獲利統計數據為負。現在它利潤很高且不斷增長，我們看到了世界各地的需求，我們也看到了零售商對做自有品牌的要求。因此，我們將擴大這一範圍，並真正希望為其提供成功的機會，同時，研究成本結構，以了解如何在整體 SG&A 之下進行最佳優化。

We've done a lot of work on that since exiting the cannabis industry. And we still have things that are rolling off our balance sheet from that. But we really want to look at how can we drive the profitability sooner, and at the same time, how can we get the business units back in hyper growth mode. And that's where we're at on a global level.

自從退出大麻產業以來，我們在這方面做了很多工作。我們仍然有一些事情正在從我們的資產負債表上滾出。但我們確實想看看如何才能更快地提高獲利能力，同時如何讓業務部門恢復高速成長模式。這就是我們在全球範圍內所處的位置。

Okay, great. No, appreciate that color there, Mike. Second question for me is just on Sprout, right. So talk about the growth there. I think you said in the prepared remarks, 89% of the market versus 50% in those first acquired 200,000 in the US and 30,000 overall, including Canada. But just revenue looks to have been down a bit sequentially about five, seven. They've been around about 8.5 average the past five quarters before that. So any specifics in terms of why the dip in the quarter now and how we get to a return to growth. Obviously, you got a lot of new products, new offerings, some good placement at Walmart. You mentioned CoComelon as well. So just some color there would be appreciated. Thanks

好的，太好了。不，麥克，欣賞那裡的顏色。我的第二個問題是關於 Sprout 的，對吧。所以談談那裡的成長。我想你在準備好的發言中說過，89% 的市場份額，而在美國首先購買 200,000 輛的市場份額為 50%，總共購買 30,000 輛，包括加拿大。但僅收入似乎比上一季略有下降，約五、七。在此之前的過去五個季度，他們的平均值一直在 8.5 左右。那麼，關於為什麼本季出現下滑以及我們如何恢復成長的具體細節。顯然，你在沃爾瑪獲得了很多新產品、新產品和一些不錯的位置。你也提到了 CoComelon。所以只要有一些顏色就會受到讚賞。謝謝

Yeah. So I'll add a cover on that. But also, Nicki, you can add in if you want. But the biggest thing that we've seen is we've seen a shift in a little bit of the SKUs, like we have some velocities that have gone very high, and we're trying to keep the on-shelf availability and stock. And we're seeing a lot of out of stocks in those. So we're shifting the production plan to match the consumer demand. And we did have a couple of production issues with our comment that we're working through and resolving, including we had a small comment note in Israel. But we have adjusted the schedule.

是的。所以我會在上面加上一個封面。而且，Nicki，如果你願意的話，你也可以加入。但我們看到的最重要的事情是，我們看到了一些 SKU 的變化，例如我們的一些速度變得非常高，我們正在努力保持貨架上的可用性和庫存。我們發現這些產品很多都缺貨。因此，我們正在改變生產計劃以滿足消費者需求。我們的評論確實存在一些生產問題，我們正在研究和解決，包括我們在以色列有一個小的評論說明。但我們調整了日程。

We're adding redundancies in the comment, and we're aligning our inventory with the consumer demand. So we've seen like the uptick in demand from retailers, and consumers, and snacks. We've seen some of our product lines that are flying off the shelf that we're trying to keep the demand on and to minimize cuts, to make sure we're able to deliver faster and more efficiently. So we're kind of adjusting our production to align with the demand of the consumer and the shift in the market with a couple of CoComelon issues that we had to deal with.

我們在評論中添加了裁員，並且我們正在根據消費者需求調整我們的庫存。因此，我們看到零售商、消費者和零食的需求上升。我們已經看到我們的一些產品線即將售罄，我們正在努力保持需求並儘量減少削減，以確保我們能夠更快、更有效率地交付。因此，我們正在調整我們的生產，以適應消費者的需求和市場的變化，以及我們必須處理的一些 CoComelon 問題。

Okay, great, thanks. Appreciate the color.

好的，太好了，謝謝。欣賞顏色。

Thank you. There seems to be no further questions at this time. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.

謝謝。目前似乎沒有其他問題了。女士們、先生們，今天的電話會議到此結束。我們感謝您的參與，並請您斷開線路。祝你愉快。