Canopy Growth Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 9, 2023

There are 9 speakers on the call.

Operator

Afternoon. My name is Michelle, and I will be your conference operator today. I would like to welcome you to Canopy Growth's First Quarter Fiscal Year 20 24 Financial Results Conference Call. At this time, all participants are in a listen only mode. I would now like to turn the call over to Tyler Burns, Director of Investor Relations.

Operator

Tyler, you may begin.

Speaker 1

Good afternoon, and thank you all for joining us today. On our call today, we have Canopy Growth's Chief Executive Officer, David Klein Chief Financial Officer, Judy Hong. After financial markets closed today, Canopy Growth issued a news release announcing the financial results Q1 ending June 30, 2023. News release and financial statements have been filed on EDAR, 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 entirety by the cautionary note regarding forward looking statements included at the end of the news release issued today.

Speaker 1

Please review today's earnings release and Canopy's reports filed with the SEC and SEDAR reconciliations between any non GAAP measures to their closest reported GAAP measures are included in our earnings release. Please note that all financial information is provided in Canadian dollars unless otherwise stated. Following prepared remarks by David and Judy, We will conduct a question and answer session. We will take questions from analysts. To ensure that we get to as many questions as If possible, we ask analysts to limit themselves to one question.

Speaker 1

With that, I will turn the call over to Dayton. Thanks, Tyler.

Speaker 2

Good afternoon and thank you for joining us today to discuss Canopy Growth's Q1 results for fiscal 2024. During the call today, I'll cover 4 key topics. First, the progress of our transformation to a simplified asset light business. 2nd, the improved performance of our Canadian cannabis business. 3rd, the strong top line performance for BioSteel and Stores and Big Hall.

Speaker 2

And finally, a brief update on Canopy USA and the encouraging developments with our U. S. Cannabis brands. Following my remarks, Judy will provide a brief overview of our Q1 fiscal 2024 results and review the actions we've taken recently to strengthen our financial position and improve liquidity. Over the past year, we made significant and sweeping changes to our business.

Speaker 2

Our strategy is anchored in our commitment to building beloved consumer brands within an asset light operating model. We fundamentally believe this model will enable us to compete more effectively. We streamlined and simplified the business in the following ways. We divested our national retail operations to reduce complexity and eliminate channel conflict. We closed many facilities to focus cultivation into 2 purpose built sites.

Speaker 2

We've outsourced production of edibles, vapes and beverages To contract manufacturers, which is accelerating speed to market, while reducing the overhead and risks involved in developing new products. Collectively, these actions resulted in a roughly 60% reduction in both our cultivation footprint and total headcount. This transformation to a simplified asset light model is working as evidenced by our increased ability to execute and deliver measurable results. Today, our remaining cultivation facilities in Kincardine, Ontario and Kelowna, British Columbia are producing the high quality flower that consumers desire. Our cultivation infrastructure has been greatly simplified and our supply is more effectively matched to demand.

Speaker 2

Transformation has delivered significant cost savings with SG and A expenses and cost of goods sold reduced by a combined $172,000,000 to date, including $47,000,000 in the Q1 of fiscal 2024. We continue to expect this transformation to yield $240,000,000 to $310,000,000 in cost savings by the end of fiscal 2024. While we're pleased with the significant progress already made, our work to complete the transformation of Canopy Growth is not yet done. Over the next weeks and throughout the remainder of the year, we'll continue to execute on opportunities to drive efficiencies and reduce expenses Next, I'd like to spend a few minutes discussing the performance of our Canadian cannabis business in the Q1 of fiscal 2024. Our adult use cannabis business delivered the 3rd straight quarter of stable to growing revenues, increasing 12% sequentially to $24,000,000 This improved performance is being led by the resurgence of our Tweed brand.

Speaker 2

In fact, in the Q1, Tweed Cushman's 28 gram country, including in the larger markets of British Columbia, Alberta and Ontario. As more consumers experience these high quality strains, the demand has elevated the Tweed brand to the number 8 rank within the total flower segment of the Canadian adult use cannabis market, moving up 19 places year over year. As we look to the year ahead for our Canadian cannabis business, we'll continue Tweed's momentum and apply the same winning approach to our Doja and 7 Acres brands. Another exciting development for our Canadian portfolio is the addition of Wanna Edibles. In late May, we announced that Canopy will now distribute Wanna in Canada, unifying our North American house of brands, which is part of our long term strategy.

Speaker 2

This is a significant step toward becoming the leader in cannabis edibles in Canada. We've developed an ambitious brand growth strategy for Wanna call. Early in the current quarter, starting with the availability of Wana Gummies for registered medical cannabis patients through Spectrum Therapeutics. We're already seeing strong demand, reaffirming the brand's potential within the Canadian market. And we're also working with the Wana team to deliver more industry leading innovation to drive the brand's leadership in the Canadian cannabis market.

Speaker 2

We expect the addition of Wanna to be accretive to revenue and adjusted EBITDA as we cement Canopy as Canada's leading cannabis edibles company. I'll now speak to the performance of our consumer products business in the Q1 starting with BioSteel. Biosteel brand delivered its 4th consecutive quarter of record revenues, increasing 68% sequentially, more than double the prior year. The strong performance by BioSteel in the Q1 was due in part to our continued drive into the food, drug and mass market channel in Canada, ahead of the key summer selling season. For those of you that live in Canada, I'm sure you've seen that the BioSteel brand has become ubiquitous And it's prominently featured in gas stations, grocery stores and Costco nationwide.

Speaker 2

In the U. S, we're tightening BioSteel's geographical focus to prioritize key markets including the Central, Northeast and Southeast regions. While the brand continues to deliver record top line growth, the investments Management is actively engaged in a strategic review of the business, including exploring a sale, and we expect to have a decision in short order to reduce the drag on our profitability as we remain focused on our core cannabis businesses. Turning briefly to our world leading vaporizer brand Storz and Bickel. Distribution gains in the United States helped grow revenue 16% year over year to $18,000,000 in the Q1.

Speaker 2

Historically, Storz and Bickel has experienced significant growth following the launch of new products. And I'm excited to share that we're in final preparations to launch A new line of innovative stores in Bickel Vaporizers this fall, setting the performance standard for cannabis vaporizers. I fully expect this will drive the next era of growth for the Storz and Bickel brand. Finally, I'd like to briefly speak about our U. S.

Speaker 2

Cannabis businesses, which continue to drive brand growth, primarily leveraging an asset light expansion strategy. Beginning with Jetty, this past July, the brand brought California's number 1 solventless vape to the state of Colorado, its 3rd U. S. Market after launching in New York State this past March. Building on their decade of leadership in the California market, Jetty expanded its product offerings in the state with the launch of the market's 1st Ocal certified solventless vapes in a variety of SATEVA and INDICA strains.

Speaker 2

Hotel is comparable to organic certification for the cannabis industry. Moving on to Wana, In collaboration with Certara Wellness in Florida, one of products from the brand's premium and innovative cannabis infused gummies lineup Are now available to patients in 45 medical cannabis treatment centers across the state of Florida, marking the 15th active U. S. State or territory in which Wanna Cannabis edibles are sold. It's worthwhile highlighting that in addition to these individual growth strategies, The Canopy USA Ecosystem Companies continue to develop collaborative opportunities and synergies, including Terasen becoming the sole manufacturer, supplier and commercialization partner of Wanna Brands in the fast growing New Jersey market as well as being Wanna's new partner in Maryland, which is now Adult Muse Legal.

Speaker 2

Speaking of Teracent, I'd like to congratulate them on their transformative TSX listing, capitalized on the large market opportunity in the U. S. In summary, Canopy's Q1 earnings demonstrate that our transformation to a simplified Asset Light Model is already yielding results. Our core cannabis our core business is stabilizing and growing. Our commercial execution has strengthened And we have delivered significant cost savings that put us on a path to achieve positive adjusted EBITDA in our cannabis businesses, exiting fiscal 2024.

Speaker 2

And while BioSteel continues to demonstrate record top line growth, our focus remains North American cannabis leadership and as such, first to monetize other non core assets. Ultimately, we remain convinced by the potential of the $50,000,000,000 to $70,000,000,000 North American cannabis market and to meet this opportunity, we've transformed Canopy into an asset light and more focused organization. We'll have more to share about our additional actions to further cement this transformation over the coming months. With that, I'll turn it over to Judy.

Speaker 3

Thank you very much, David, and good afternoon, everyone. I'll start by recapping our Q1 fiscal 2024 results, call, including the progress we're making to achieve profitability. I'll then discuss our balance sheet and the additional actions we've taken to delever the balance sheet and improve liquidity. I'll then review our priorities and outlook for the balance of fiscal 2024. Let's begin with our Q1 fiscal 2024 results.

Speaker 3

Overall, we view Q1 as a key inflection point We delivered revenue growth and profitability improvement across virtually all of our businesses, generate additional cost savings Looking at our consolidated financial results, we delivered net revenue of $109,000,000 in Q1,

Speaker 4

net revenue

Speaker 3

increased 16%. Drivers of revenue growth were BioSteel, which was up 137% and Stores and Bickel up 16% year over year. Q1 gross margin was 5% with all businesses except for BioSteel showing improvement on a year over year basis. Excluding BioSteel, Q1 gross margin was 18% and adding back non cash depreciation and E and O expenses, we estimate cash gross margin was approximately 35% excluding Thial Steel. Q1 adjusted EBITDA loss was $58,000,000 Q1 was attributable to BioSteel.

Speaker 3

Free cash flow was an outflow of $151,000,000 which included a few non recurring items, which I'll speak to in more detail later on. I'd like to now review the results of our key businesses in more detail. Starting with Canada. Q1 net revenue was $40,000,000 a second quarter in a row of sequential revenue increase. Our adult use B2B business was down 9% compared to last year, but was up 12% compared to the prior quarter, lead by strong growth from our sweet flower and pre roll products.

Speaker 3

Canadian medical sales increased 7% compared to last year. Gross margin was negative 1% and cash gross margin adding back non cash depreciation costs and E and O expenses and costs results of an estimated 32%. The improvement versus last year was driven by the cost reduction actions we've implemented, part of our business transformation plan. We expect additional cost reductions to drive further improvement in gross Margins following our full exit of 1 Hershey, Maine facility at the end of July. Rest The world's cannabis sales were down 26% year over year, but increased 16% versus Q4 of fiscal 2023.

Speaker 3

Last year's revenue included a $3,500,000 opportunistic bulk sales to Israel improvement in our U. S. EPD business post our strategy shift, partially offset by a geographic mix shift with last year's margin business, boosted by high margin bulk sales to Israel. So when you look at our cannabis business in total, We delivered revenue of $50,000,000 gross margin of 18% and an estimated cash gross margin of 32% in Q1. Turning to non cannabis, starting with Store's A Big Goal.

Speaker 3

SMB saw its Revenue returned to growth in Q1 with sales growing 16% year over year, primarily driven by improved U. S. Performance. As you recall, our U. S.

Speaker 3

Sales at fiscal 2023 were negatively impacted in part by financial challenges and Certain Distribution Partners. Over the course of the past several months, we've enhanced our U. S. Presence with additional resources and this effort is driving expanded distribution of the stores and vehicle vaporizers in our key U. S.

Speaker 3

Market. SMB gross margin saw an improvement to 43% compared to 36% a year ago, driven by higher sales in the U. S. PittsWorks grew its sales 9% year over year, benefiting from increased contributions from its body care product line. Gross margin remains healthy at 48%.

Speaker 3

Let me now spend a couple of minutes on BioSteel. Biofuels saw an outsized revenue growth this quarter, up 137% to over $32,000,000 during Q1, We believe Q2 performance will show more modest growth. Gross margin came in at a negative 24%, aging of certain inventory as well as higher repair and maintenance costs at the Verona manufacturing facility. IFCU also saw an increase in its SG and A expenses compared to Q1 of last year, driven by higher A and P spend call due to the NHL sponsorship costs that began in the Q2 of last fiscal year. As we We said in the last call, we've implemented a number of actions to reduce our costs across the P and L at BioSteel, which are expected to improve both gross margin and reduce A and P spend in the coming quarters.

Speaker 3

Let me now speak to the progress we're making on our path to profitability. Q1 fiscal 2024 adjusted EBITDA loss was a negative $58,000,000 compared to $79,000,000 a year ago. The improvement is driven by cost reduction of $47,000,000 from the business transformation plan, G and A and R and D expenses declined by a combined $15,000,000 or 17% compared to a year ago. Excluding increased investments in BioSteel, selling and marketing, G and A and R and D expenses declined by $6,000,000 or 30 percent year over year. Our acquisition, divestiture and other costs increased by $5,000,000 to 9,000,000 The biggest driver of the increase is over $5,000,000 of costs related to the restatement of BioSteel's historical financials.

Speaker 3

I'd like to now review our cash flow and balance sheet. Our cash and short term investment balance at June quarter end was 5 $1,000,000 reflecting a net cash outflow of $212,000,000 from the March quarter end. Breaking down the cash outflow of $212,000,000 First, cash flow from operations was an outflow of $149,000,000 Included in the cash outflow was the $30,000,000 interest payment. Q1 cash outflow also included several non recurring cash payments, liquidity, including $17,000,000 in litigation related payments and cash restructuring costs that we do not expect to recur. And BioSteel saw an increase in working capital this quarter due to sales growth, including an approximately $16,000,000 increase in its accounts receivables.

Speaker 3

We expect our cash flow from operations, excluding BioSteel, to be roughly in line with our interest expenses as we exit FY 2024, driven by the completion of our cost reduction program. 2nd, within cash flow from investing activities, Q1 saw an inflow of $83,000,000 from disposition of facilities that we results before the end of September for total proceeds of up to $150,000,000 Net financing activity resulted in an outflow of $133,000,000 Debt pay down during Q1 of $118,000,000 relates to the second pay down of the senior to return loans following the agreement in October of 2022, the $15,000,000 other financing activities related to the lease termination We had $571,000,000 in cash and short term investments and total debt of 1,045,000,000 Subsequent to the quarter end, we've taken additional actions to strengthen the balance sheet and improve liquidity. We settled a full $237,000,000 principal amount of the July 2023 unsecured notes through exchanging $64,000,000 of the notes Into Equity, refinancing $40,000,000 into a new convertible note, which we expect to equitize post our Annual Shareholder Meeting in September and paying the remaining $133,000,000 in cash. We made $93,000,000 of payment to reduce the $100,000,000 of the senior secured term loan principal amount at $0.93 on the dollar and we removed the minimum cash liquidity covenant under this terminal.

Speaker 3

We also remain on track to generate total proceeds of up to $150,000,000 by end of September, So following the completion of these actions and assuming that the promissory note held by Constellation is settled in equity, We estimate our total debt balance will decline to approximately $570,000,000 with minimal short term debt obligation. In addition, our annual interest expenses are expected to be reduced by $20,000,000 to $30,000,000 to approximately $80,000,000 to $90,000,000 key priorities and outlook for the balance of fiscal 2024. In Canada cannabis, we're firmly on a to achieving profitability at current run rate revenue as we achieve the remainder of cost reduction program. We also believe that the addition of Wana Gummies into our portfolio provides potential upside to both sales and profitability in the back half of our fiscal 2024. In Rest of World Cannabis, we expect continued growth in Australia and Poland as well as improved performance in Germany, driven by new supply of high THC flour in the back half of our fiscal 2024.

Speaker 3

For Store's A Big Goal, Q2 is expected to be impacted by seasonality with sales and profit down compared to Q1. However, we expect growth in the back half of the year driven by a new product launch in the fall and a continued focus on improving performance in the U. S. For BioSteel, we expect Q2 sales to show more modest growth compared to Q1 as sales velocity And shipment patterns are expected to normalize post the summer selling season. This work sales are expected to be down in Q2 versus Q1, again impacted by seasonality.

Speaker 3

From a cash flow standpoint, we expect our cash from operations current business momentum across our core businesses and completion of our cost reduction for rent. In closing, we believe Q1 results demonstrate that we're well underway to achieving our target of positive adjusted EBITDA as we exit FY 'twenty four with exception of Bio Steel. We're also actively working to remove the drag to our profitability and cash flow from BioSteel as soon as possible and several initiatives Our next question comes from the line

Speaker 2

of David. Please go ahead.

Speaker 3

Thank you. Thank you. Thank you. Thank you. Operator, David and I are now happy to take questions from analysts.

Operator

Thank you. Followed by the number and if you are using a speakerphone, please lift your handset before pressing any keys. To ensure an efficient call that gets to the questions of as many analysts as possible.

Speaker 2

One moment

Operator

please for your first question. Your first question will come from Vivien Azer at TD Cowen. Please go ahead.

Speaker 5

Hi, good evening. Thank you so much.

Speaker 3

Hi, Vivian.

Speaker 5

Hi, Judy. Hey, David. So Judy, you mentioned at the end of your prepared remarks that you wanted to Present upside to the targets that you're reaffirming today. And David, in your prepared remarks earlier, You noted that the wanted distribution agreement would be accretive to both revenues and profitability. So I just want to dig into that a little bit more and better understand how number 1, the economics work on distribution because really like For business at scale, which maybe that's just not the case here, CPG margins are generally higher than distribution margin.

Speaker 5

So I just want to understand that a little bit. And then more importantly, I think from a strategic standpoint, like how are you thinking about Prioritizing Wana within your total portfolio because it seems to me that you guys are having a fair amount of success in revitalizing Your master brand in flower. But the master brand approach that you guys inherited seems to have brought a lot of risk to the portfolio, right? And so if you're picking different brands across different categories, maybe you're derisking the portfolio a little bit. So I'd love to get your perspective on that.

Speaker 5

Thank you so

Speaker 2

Yes. So I'll start out. So yes, so Wana in Canada right now is Roughly 13 share of the edibles market, and we think that with Our team is driving distribution in Canada. We can grow that year a reasonable amount. We As a result of our ownership of Wanna, through the option structure, we actually will get all of the brand owner economics For Wanna in Canada.

Speaker 2

So it's not just distribution margin, it's the entire margin related to brand ownership as well as distribution. Of We have to pay us to manufacture to our CMO partner. So that's why we think it's generally accretive From a growth standpoint, it will be accretive from an EBITDA standpoint and a margin standpoint. And we also think it will It's just a nice add from a dollar standpoint to our portfolio. I'll address The master brand approach because I think if you look at the brands we have in Canada, the flower brands in Canada, We focused on revitalizing Tweed first because Tweed is actually, at least supporting the surveys, the best known cannabis brand in Canada.

Speaker 2

However, we had some work to do from a quality standpoint. And I think we've now delivered that quality into the market and we saw a lot of growth behind A couple of really strong strains in Tweed. And we'll apply that to our Doja brand and 7 Acres brands in the flower space. Talked about Wanna in the edible space in Canada. And then from a beverages perspective, we continue to drive Tweed as a beverage brand as well as Deep Space as a beverage brand in this market.

Speaker 2

So we like that. And then Vivien, the other thing that we like is Having Wana in markets like Toronto and Montreal and Vancouver as well as having it in markets Like the Certara markets in Florida and their overall positioning in Colorado. It starts to get exposure and feel like a real North American brand. And, we've said this before, and I know we don't disclose Financials as it relates to Wana, but it's a profitable business that's positioned really well in some really key markets Across the U. S.

Speaker 2

And that we just want to revitalize that in Canada.

Speaker 3

And then Vivien, I think just in terms of from a financial standpoint, if we take a step back, What we said about Canada was that all the actions that we've taken was really to position Canada to achieve profitability at the current run rate of revenue. And I think I've said in the past that if we achieve $35,000,000 to $40,000,000 of revenue in Canada, then we We believe that we have the cost structure to achieve our profitability, and this is now the 3 quarters in a row where we've been in that range of revenue. So To the extent that Wanna provides upside to that range of revenue, we think that there is potentially an upside to improving our profitability in the Canadian business. We'll provide more details as we get more color just in terms of the revenue and the profit

Speaker 5

That's really helpful. Thanks so much.

Operator

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

Speaker 4

Hi, good evening and thank you for the question. So one shift a little bit to each and

Speaker 6

Hi, guys. Can you hear me okay?

Speaker 3

Yes.

Speaker 4

Okay, great.

Speaker 6

Yes, I want to shift

Speaker 4

a little bit to international. So I know more recently you've been bringing up Australia and Poland, but want to talk a bit about Germany. You mentioned a little bit about getting the high THC flower in the supply. Some of your peers in that country have been talking about potential big uptick in inpatient growth, given it's going to be removed from the narcotics. So Wanted your take on Germany given that once been one of your key markets that you're going

Speaker 2

to look towards. So do

Speaker 6

you think there's a lot

Speaker 4

of opportunity there for reinvigorated patient growth going forward that you might be able to take advantage of and how you think about the market? Thanks.

Speaker 1

Yes. So Aaron, we've done

Speaker 2

a lot of work To get regulatory clearance for our strain offerings in Germany and To ensure that we had the GMP production capacity in Canada, and we feel good about our ability to produce The right strains for that market and at the beginning of July, we actually added significantly actually to our sales team in Germany, so that we can address that market really well. So we feel bullish on it. Again, I think we're seeing a lot of growth out of Australia. We're seeing really good growth in the market in Poland. And We believe that we can get some good growth out of the German market as well.

Speaker 2

And as Judy called out in her comments, we feel good about the performance of that international business. It's a little bit muted on a year over year basis because of the one off sale into Israel this quarter last year, but

Operator

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

Speaker 7

Thank you. Good evening. Just wanted to drill into BioSteel a little bit. It drove the beat against our estimates and has some nice momentum. But obviously, you've been clear that it's investment level that's Not appropriate for where you are and that it should you're looking for a better home for it.

Speaker 7

But I guess a couple of things related to that. If the economics are a little tricky given kind of the ramp up stage it's in, have you Found a lot of demand for that. Is there somebody with more appetite and ability to make that investment upfront? And I guess timing wise, can you give a sense of if that does go through when we might expect that to happen? Is this something that Is in the works or I know there's not much detail on these things that you're normally able to give, but just some sense of How to think about what the trajectory looks like and where that fits in kind of the rest of the year or into 2025?

Speaker 2

Yes, Michael, that's a fair question. So we love the BioSteel brand as consumers and consumers love the brand. It's authentic. It's healthy. It resonates with consumers, both athletically inspired consumers and others.

Speaker 2

But as we started on this path to really Simplify our business and focus on the cannabis industry that we believe in, in this $50,000,000,000 to $70,000,000,000 addressable market that we have In the cannabis business just in North America, it just becomes clear that there that we need to make sure that We're at least not sitting here with a real strong drag coming from a brand like BioSteel that's Not a cannabis focused brand that sits in our portfolio, right? So as we said in my comments, and it's really probably all I can offer at this point is, We're working with our Board and with the BioSteel team to significantly reduce the drag on EBITDA and cash flow that we're experiencing from BioSteel and we're going to move as quickly as we can on that.

Operator

Your next question will come from John Zamparo at CIBC. Please go ahead.

Speaker 8

Thank you. Good evening. My question is on the cost reduction plan. And it's a fairly wide range that you have remaining when you think about what's left. And I wonder what are some of the factors that will determine whether you get closer to the 240,000,000 end of the range or the $310,000,000 And just a clarification on that, does that range include remediation efforts on the BioSteel brand or is that to be considered ex BioSteel?

Speaker 3

So I'll address this, John. So just the second part of your question, this is really Excluding Bio Steel, so the cost reduction plan is really around the Canada transformation plan, as well as just The reductions that we've made across the organization to ensure that we're continuing to streamline our business simplify our operations and as a result, we've been obviously able to generate significant cost savings year to date and some fiscal 2020 3, and we have remaining cost reduction program to get to that range of $240,000,000 to $310,000,000 target. The reason that we're leaving the range wider at this point in time is really I think the second kind of phase of our cost reduction program is just starting that we're has executed in July, and that's really about exiting a full exit of the One Hershey, the main campus where we've fully exited the global operations. We have obviously moved all of the production over to beverage the old beverage facility and saving on all of the manufacturing and indirect costs and direct manufacturing costs. So We think we've done a good enough of a modeling job to understand where the cost reductions are coming from, but we just want to make sure that as We're executing the plan that, that range is appropriate and we'll provide more details as we

Operator

Your next question will come from Matt Bottomley at Canaccord. Please go ahead.

Speaker 6

Hi, this is Yewon King on for Matt Bottomley. Thanks for the question. I guess just wanted to touch On the EBITDA guidance that was reiterated for fiscal 2024. And apologies if I missed this earlier during the prepared remarks, but Just trying to understand the different components within the quarterly adjusted EBITDA loss amount for the current quarter. So given that the current outlook is calling for all segments except BioSteel to continue positively to adjusted EBITDA Contributions to the total adjusted EBITDA amount for the rest of the year.

Speaker 6

Thanks.

Speaker 3

Yes. So I'll try to be as helpful as I can. And so I think I can do that by just giving a bit of a bridge in Q1. So our adjusted EBITDA loss in Q1 was roughly $58,000,000 I commented in my remarks that we estimate about 60% of that loss is attributable to BioSteel. So if you're basically removing Biosteel's loss from that $58,000,000 you're going to be somewhere, call it around $25,000,000 of adjusted EBITDA loss.

Speaker 3

I've also outlined that basically we have Range of the cost savings remaining is roughly $100,000,000 or so at the midpoint of the range. So the $25,000,000 loss will get bridge to our expectation of breakeven deposit of adjusted EBITDA post completion of all the cost savings programs. So that's how you will bridge from excluding BioSteel what's remaining in Q1 as an adjusted EBITDA to adjusted EBITDA positive exiting FY 'twenty four.

Operator

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

Speaker 2

Thanks again for joining us today. I encourage you to try some of our outstanding products from our innovative brands as you enjoy the rest of your summer. Our Investor Relations team will be available to answer additional questions. Have a good evening.

Speaker 3

Call.

Operator

Ladies and gentlemen, this does conclude your conference call for this afternoon. We would like to thank you all for participating and ask you to please disconnect

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Earnings Conference Call
Canopy Growth Q1 2024
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