Good morning, welcome to Canopy Growth's first quarter fiscal 2019 financial results conference call. After markets closed yesterday, August 14th, 2018, Canopy Growth issued a news release announcing its financial results for the first quarter ended June 30th, 2018. This news release will be available on Canopy Growth's website and filed on SEDAR. On the call this morning, we have Bruce Linton, Canopy Growth's Founder, Chairman, and Co-Chief Executive Officer, and Tim Saunders, Canopy Growth's Chief Financial Officer. In addition, Mr. Rob Sands, the CEO of Constellation Brands, is joining the call today. At this time, all participants are in a listen-only mode. Certain matters discussed in today's conference call or answers that may be given to questions could constitute forward-looking statements. Actual results could differ materially from those anticipated.
Risk factors that could affect results are detailed in the company's annual information form and other public filings that are made available on SEDAR. During this conference call, Canopy Growth will refer to supplemental non-GAAP measure adjusted EBITDA. These measures do not have any standardized meaning prescribed by IFRS. Adjusted EBITDA is defined in the press release issued earlier today, as well as this period's management's discussions and analysis documents that are filed on SEDAR. Please note that all financial information is provided in Canadian dollars unless otherwise specified. Following the prepared remarks by Mr. Linton, Mr. Sands, and Mr. Saunders, the company will conduct a question and answer session during which questions will be taken from analysts. If you'd like to ask a question at that time, simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question, you may press the pound key. Thank you. I would now like to turn the meeting over to Bruce Linton. Mr. Linton, please go ahead.
Good, thank you. For everyone on the call, the flow will be, I'm going to say some remarks, Rob will, and then we'll move to the quarter and we'll cover that off, and then we'll go to questions after that. We'll cover both what I would say is a pretty significant and interesting transaction where Constellation is acquiring about another 25% of Canopy for approximately CAD 5 billion. I'd like to say good morning and welcome to Rob, and it's been great. People on this call will recall in October 2017, Constellation and Canopy announced that we were having this investment come in and a relationship was going to begin, and we were going to focus on beverages and brands. With that announcement, everyone got excited, and so did we, and then we went off to work.
There hasn't been a week go by that people from my company aren't interacting and building and thinking with people from Rob's company. We've established, I think, an unbelievably confident, comfortable level of appreciation for how they run as entrepreneurs and how we do. This is a relationship that has been built, when the capital comes in, we each know what we're getting, and we're looking forward to going faster. This is really rocket fuel. It does add quite a lot. As we look around the world, we're going to be expanding production. We're going to be doing more research. We're going to develop more intellectual property. We're going to create more leading brands. We're going to have more products, and we're going to be way more global.
If you're thinking about this, it does establish that Canopy is the cannabis platform for Constellation, and that's a great deal of focus and trust, and we took it seriously as a management team. Everybody on my team was unbelievably excited to take this next step to the place where we could actually go global and do it with and for Constellation. Their international experience, their brand building, their finance, M&A, they're quite unbelievably capable in those areas, and we get to draw on that with much more focus. The investment in our Canadian capacity has been made, so I want to be clear, Canopy has the production platform we need to deliver what we want in Canada. We are not going to be acquiring cultivation assets in this country, is the absolute clear and current plan.
That I want to make clear because this is about an international thing. This is about growth around the globe. The board structure will continue to see me as Chairman and a couple of my current board members who are independents on. Constellation's bringing a couple of independents and two key people from their staff. Anyone who's covered and worked with Constellation would know Bill and Dave as the President and CFO. They have been core to how we've created this arrangement and how we've worked together, so I welcome them to the board. The hometown, Smiths Falls, continues to be headquarters, and this is more rocket fuel for that town to see the growth and construction we've been doing. The opportunities we see before us, I don't think it's appreciated yet how quickly things are opening up in Europe, Latin America, and even likely the U.S.
We're focused on medicinal as that's the first and biggest platform. Obviously, as medicinal comes to play, some geographies will and are expected to open up and create a bigger platform for consumer products. We're driving all that right now. It was our view the time to invest isn't having a 2021 or 2022 plan. It's now, and I would suggest this marks the end of the warm-up in our sector where everybody's been sort of getting prepared. It is fully go time, and this is a piece of capital at a structure that I think gives us a huge advantage. Together, I, as a shareholder, strongly support this, and I think our shareholders will as we go out to vote at the end of September. They recognize we've built this leading company, and we've been recognized at it, and now it's time to accelerate.
This is a big turn for us. The whole made in Canada thing now becomes made in Canada for the globe, and I'd like to ask Rob if he would provide a few comments before we move through the quarter. Thanks. Here you go, Rob.
Thanks a lot, Bruce, and good morning, everyone. This is an extremely exciting time to be part of what could potentially be one of the most significant global growth opportunities for the next decade. We've worked closely with Canopy throughout the last year to better understand the cannabis market, this unbelievable opportunity it presents, and Canopy's market-leading capabilities in the space. Constellation's incremental CAD 5 billion, $4 billion investment in Canopy Growth is the largest investment to date in the cannabis space. The most strategic aspect is that Constellation will be exclusively working with Canopy for the global cannabis opportunity that we believe is opening up much more rapidly than appreciated, as Bruce said. We believe that having a single platform to address all markets and formats globally is essential to winning in this space.
This investment and alignment represents the next step in the evolution of our business as we solidify our strategic partnership with Canopy. I'd like to take a few minutes to walk you through the strategic rationale and highlights of the Constellation investment, and why we believe that Canopy is the best partner to align with in this cannabis space. Canopy plans to use the proceeds to bolster their global leadership position in the cannabis industry by building or acquiring key assets needed to establish global scale. Strategic priorities beyond Canada include the U.S. and the nearly 30 countries currently pursuing a federally permissible medical cannabis program, intellectual property development across medical and recreational opportunities, while also preparing and creating brands and products for the new legal recreational cannabis markets. This transaction supersedes our initial agreement with Canopy to produce a non-alcoholic cannabis-based beverage.
Going forward, Constellation will support Canopy's full suite of products that are currently available and assist as they develop new offerings across various product formats and through all new and existing channels. This partnership is a powerful combination of Constellation's expert capabilities in M&A, marketing, brand building, and large-scale production, and Canopy's entrepreneurial approach and best-in-class knowledge and expertise within the emerging cannabis market. As the leader in the total beverage alcohol space, we look forward to reaping the benefits of our cannabis investment, which we see as being incremental to our core beer, wine, and spirits portfolio. Bruce and the Canopy team have built a phenomenal business, and I'm very excited about the excellent prospects for this business as the global cannabis space emerges.
With that said, I'd like to now turn the call back over to Bruce so that Bruce can proceed with a view of Canopy's quarter results. Thank you, everybody. Bruce?
Great. Thanks, Rob. I suspect we'll get a chance to answer a few questions on that. Let's move to the quarter. It was a good quarter. We continue to lead the medical cannabis market in Canada and around the world. We got about CAD 25 million in revenue. That's about 63% up year-over-year. Price per gram moved up, and that reflects increased sales to Germany and change of format. Germany was about CAD 3 million in revenue this quarter. We don't count the German patients in our patient count at 85,000 patients. That's in Canada only. We were busy. We got the Spectrum soft gels, and this will be important. The mode of educating doctors is going to be very much about how you move them along so that they're educated on the application of which strengths and types of cannabis are suitable.
The soft gels became color-coded so that if we do our sleep trial, which we announced the Phase IIb sleep trial, if we find that the combination of delivery mechanisms in, say, Spectrum Blue gets a positive response on sleep, as we migrate people through that, they're going to find that their sleep tool is Spectrum Blue. That doesn't talk about cannabis, it talks about a product. If you can start to make claims about a product, the format of the product can shift from a gel cap to an inhalation device to whatever. People, we think, will become very comfortable with the name, the brand, and the Spectrum positioning, and it doesn't then link back to any specific strain. Those are kind of migratory path items, but they're important and they've been laid down. We've been busy in Canada and Europe.
We've got Spectrum Cannabis operations now in 11 countries, five continents. We got the acquisition in Colombia, Lesotho, and Czech Republic. We got medical research rolled back up. Canopy Health is now a wholly owned subsidiary. In that subsequent event, we talked about and announced our first Canadian-approved veterinarian trial, which is looking at anxiety in mammals and how we could possibly relieve or remedy that with cannabis. This is going to be another big category, and we think we're quite well-positioned and ahead on that.
Globally, when we look at the access patients are having, in January, if I did this call and I tried to tell you that there's a probability that the U.K. would be talking about cannabis and the possible normalization and governance of it that looks a bit more like their colony, Canada, and a little bit less like North Korea, you would have thought I maybe was bonkers. Here we are today, and cannabis and the regulatory structure for it's on the agenda in the U.K. We're seeing it everywhere. This is kind of a big change.
CBD is what we're focused on with animals, but CBD every day is moving through a progression where it's going to become part of the normal course of available ingredient set Which means that it's going to become really productized and I'll call it either proven by test or proven by brand, and it's not going to be the ingredient that matters, it's going to be how you put that ingredient on the shelf or to the patient. I think we're doing a very good job of getting in front of that. We have 39 provisional patents. They range from areas from insomnia to fibromyalgia, pain, companion animals. We think we're doing a very good and rigorous and active job on intellectual property definition and as we go forward, protection.
With what we've got in Canada, it gives us the patients and the platforms who can actually do the medical tests and whether or not it's looking at anything from how does it reflect on your sleep condition to what's the bioavailability of a formatted delivery. Those are the sorts of things that we can prove out in Canada and take globally. With the investment we covered a bit earlier, you can start to see where it doesn't take too long to contemplate globally, maybe there's a number of pieces we could pick up. You have a bucket that could be called M&A. The expected production and delivery in most of the countries is being set out in the regs, so you can see where you could build out in a few countries.
In this quarter, I think Tim will cover it off, but we have about CAD 1.4 billion of tangible assets, real things on our balance sheet net of cash, and that's for Canada and a little bit started elsewhere. You can see where construction could use that up and the yield that comes off those assets, we're just going to start seeing as we enter into the latter part of this year. Just over two months away from opening up for rec, I think you'll be happy to see where we are with inventory, biological assets, and we're quite happy with where we've landed with all the provinces that have announced the supply agreements. You haven't seen yet an announcement from Ontario, but you have seen an announcement that we think is very positive, which means we could expect to have stores in the province.
That we'll go from the seed to the storefront, that we'll be able to educate and bring patients on board or customers on board so we can actually make sure that their loyalty to the brand relates to the quality of the experience of the purchase, which includes how the people are trained and selected. We're pretty excited about Ontario. I know that if your objective is to hold the stock for a day, that may have been a bump in the road announcement. If you're looking at this over the next six, 12 and 24 months, I think that model's going to work way better for the province of Ontario and for Canopy specifically. We'll let Tim get into some of the details on the numbers, but I did like how the inventory levels moved up, patient levels moved up.
We have not been pushing to have the patient levels move up. They are selecting because we do a great job, and we will support those patients as we go forward. Our base number is 85,000 patients as we turn the corner into adult access, and we've committed to those 85,000 patients. They will get supply and support before anyone else. I think from a business level, it's a nice piece of steady business. Our supply agreements on top of that are about 67,000 kilograms across seven provinces and one territory. I'll highlight that we are the only ones selected across that platform. If you work it backwards, I think if you take the total amounts that have been announced, that's somewhere north of 35% of the total announced inventory that would be brought into the different provinces.
I think that should reflect quite well in our shelf space and our possibility of creating the first dominant national brand that goes to rec. We shipped approximately 8,700 kilograms last year. We expect the round we did of a convertible debenture was quite a meaningful transaction, and that was in June, and here we are in August with this one. Our stores in construction seem to be on schedule, so we're looking at construction on sites in Newfoundland, Manitoba and Saskatchewan. We're still waiting on what the build out will look like in Alberta, but I can confirm we have, I think, a very competent structure where really all of the millworks are done offsite and the installation process goes rapidly. We feel comfortable for the stores that we've been awarded on October 17th. They'll look great, be open and be pretty busy.
I think we've done a good job in terms of our technologies. We've been rolling out an upgrade on our ERP. We have our direct sales force across the country, they have both been educated and have the necessary tools in their hands to actually make sure that we have the best sales force, and that'll be key for the stores that we don't own. In the acquisition category, there was an announcement of Hiku Brands. Hiku is both location brands and I think a great team. That transaction is set to go to vote at the end of this month. We like what they can bring to our crew. Finally, we've been quite busy on spending.
You'll see the spend line that Tim talks about has been about finishing up everything from greenhouses to extractors, to warehouses that are secure platforms that can ship in excess of CAD 1 billion through that kind of a platform on an automated labeling and packing system. We've made the investments to be ready. We're looking forward to the 17th. We're starting to feel the provinces coming through with the orders. We expect to have quite a busy time starting in late August or September as far as shipments go. With that, I'll hand it over to Tim to get into the details of the quarter. Tim?
Thank you, Bruce, and also thank you, Rob, and good morning, everybody. I'll proceed now with a review of the first quarter ended June 30th. Revenue for the first quarter was CAD 25.9 million, representing a sequential quarter-over-quarter increase of 14% and it's a 63% increase over the same quarter last year. Included revenue, as Bruce mentioned, revenues in Germany totaled CAD 3.4 million through our German subsidiary, Spektrum Cannabis GmbH. Oils, including soft gel capsules, accounted for CAD 5.2 million and CAD 1.1 million, respectively, for this quarter and the same quarter last year, or 26% and 19% of product revenue respectively. The total quantity of cannabis sold during the quarter was 2,695 kilograms and kilogram equivalents at an average price of CAD 8.94 per gram, up from 1,830 kilograms and kilogram equivalents at an average price of CAD 7.96 in the same quarter last year.
The higher average price, as Bruce mentioned, was principally due to increasing sales in Germany and as well as the product mix with oils and gel caps accounting for an increasing proportion. The average sale price per gram sold in Germany was CAD 13.62 per gram. As Bruce just mentioned, today we just stand over two months away from the opening of the rec market, an event that we've all been preparing for and investing in for the last two years. We've invested and continue to invest significant effort, capital, and resources, and activities and programs to ready the company to participate in and lead the Canadian recreational cannabis market. These investments continue to cover the company's entire business operations, including production, fulfillment, marketing, sales, and G&A.
In the first quarter ended June 30th, the company harvested 9,685 kilograms with over 2.4 million sq ft of area in BC Tweed greenhouses licensed and planted early in the first quarter of fiscal 2019, and with over 1.5 million sq ft of greenhouses along with Mirabel in Quebec, in Niagara-on-the-Lake, we expect to be licensed shortly. We expect the amount of cannabis harvested to increase significantly in the coming quarters. The cost of sales, including the impact of cash operating costs of subsidiaries not yet fully cultivating or selling cannabis, including partially licensed greenhouses operated by BC Tweed and Vert Mirabel, and higher overheads incurred while preparing operations for the expected legalization. Excluding these costs associated with the non-cultivating assets, these additional overheads total CAD 5.4 million.
The gross margin, therefore, before the fair value impacts on cost of sales in the first quarter, would have been CAD 16.5 million or 64% of sales. The first quarter gross margin, including the cost of operating these non-cultivating subsidiaries and such, but before the fair value effects of the IFRS accounting for biological assets and inventory, was CAD 11.1 million or 43% of sales as compared to CAD 8.7 million or 55% of sales in the same quarter last year. Now turning for a moment to operating expenses in this quarter. As been highlighted, the company continues to make significant investments across all areas of our business to strengthen the company's leadership position in the Canadian and global medical cannabis markets, as well as in preparation to lead the rec cannabis market that is set to open on October 17th.
As a result, these investments have significantly increased operating expenses over prior periods, essentially spending for a rec market to come in a quarter while it's still medical. Sales and marketing expenses include increasing staffing levels and marketing sales functions, including retail, needed to service the coming regulated recreational international markets, costs associated with the development of branding, marketing, and education campaigns, the development of new permitted product SKUs, the development of recreational product packaging, the development of cannabis retail and education programs, as well as costs associated with the company's medical outreach program and the growing customer care center, which interfaces directly with those customers. Sales and marketing expenses for the quarter ended was CAD 17.3 million, or 67% of revenue. In comparison, sales and marketing expenses for the quarter last year was CAD 6.4 million, or 40% of revenue.
G&A expenses for the quarter were CAD 19.6 million, or 76% of revenue, compared to CAD 7.5 million or 47% of sales in comparison last year. Similar to the reasons for investments made in sales and marketing, G&A has also grown to scale our infrastructure, governance, and capabilities with expectations to support domestic and international growth. Now turning my attention to other expenses and net income. Including other expenses, this is below the loss from operations, you'll note we had a CAD 60.4 million expense for the quarter ended June 30th, and that was comprised of a non-cash fair value loss of CAD 19.3 million, principally related to the change in fair value of the TerrAscend warrants and a non-cash fair value loss on the AusCann options. Both the warrants and options were initially recognized at fair value and are subsequently remeasured to their fair value at the end of each reporting period.
Other expenses also include CAD 16 million related to convertible debt issue costs, which arose at the end of the quarter. In addition, fair value changes on the BC Tweed and Vert Mirabel put liabilities combined to a loss of CAD 18.1 million. Of note, due to the full acquisition of BC Tweed in July, the BC Tweed put liability, which had a fair value of CAD 72.6 million on the balance sheet at the end of June, will be extinguished in this quarter and will result in a gain in the second quarter coming. All told, the CAD 60.4 million in other expenses described here really accounted for CAD 0.30 of the reported CAD 0.40 loss per basic and diluted share in the quarter, and that compares to CAD 9.2 million or CAD 0.06 per basic share diluted quarter in the same period last year.
Net loss in the quarter after taxes and other expenses that I just described, drove a reported net loss of CAD 90.8 million or CAD 0.40 per share, as I just said. Adjusted EBITDA, as defined in the press release and MD&A, in the first quarter amounted to a loss of CAD 22.5 million, which is about CAD 0.11 per share impact. That compares to an adjusted EBITDA loss of CAD 3.9 million last year. We believe our deliberate and ongoing investment in building the company's production platform, brands, international reach, partnerships, and operations, which directly impacted our adjusted EBITDA during the period, is really necessary to strengthen the company's global leadership position heading into next year, while at the same time competing in the medical market that will exist through this quarter as well. Turning our attention to the balance sheet and cash flows.
At June 30th, the company's cash comprised of cash and cash equivalents totaled CAD 657.9 million, up from CAD 322.6 million at the end of March 31st. The increase in the end of fiscal year was mainly due to the net proceeds from the issuance of long-term debt, or that is the convertible debt, of approximately CAD 584 million, mostly offset by the investments in the facility expansion that we've described in this call, which totaled CAD 153.7 million since last year, and other cash applied to funding operations and infrastructure. Investments in facility enhancements were primarily improvements at facilities in both locations in the Lower Mainland of B.C. or BC Tweed, as well as Niagara-on-the-Lake, expanding the footprint there, and also in the transformation in Smiths Falls, Ontario. At the same time, doing build-outs in Fredericton, New Brunswick, and also Mirabel, Quebec.
Investments also include information technology upgrades, as Bruce described, and applying and introducing new systems as we scale up. As Bruce talked about, the inventory at June 30th amounted to CAD 118.2 million, up from CAD 101 million at the end of March. At the end of June, biological assets had grown to CAD 52.8 million, up from CAD 16.3 million at the end of March. Together, inventory and biological assets totaled CAD 171 million, up from CAD 118 million at the end of March. Inventories are continuing to be scaled to meet our expectation of market demands, including the legalized rec market, as the provinces begin to stock up for the October 17th launch. At June 30th, inventory quantities amounted to 19,721 kilograms of dry cannabis.
Of this amount, 2,594 kilograms was finished goods available for sale, 6,576 kilograms of product was in process of testing and awaiting release for sale, and there was 10,551 kilograms of cannabis held for conversion to oils and capsules. In comparison to March, we had 15,726 kilograms of dry cannabis, which was in inventory, and was comprised of 2,982 kilograms of finished goods, 3,480 kilograms of product awaiting approvals, and 9,264 kilograms of cannabis being held for conversion. June 30th, we had a total of 14,895 liters of cannabis oil, ranging from concentrated resins or refined oil to oil in its finished state and available for sale. That's up from 6,969 liters at the end of March, also having the same composition. We also had 1,055 kilograms of capsules on hand at June 30th. That's up from 356 kilograms of capsules that we had on hand at March.
Management continues to believe that significant demand will develop for cannabis oil and in particular, softgels in this rec market. As such, the company continues to increase inventories of extract-grade dry cannabis held for conversion, and will increase the quantity of cannabis oil and softgel caps that we have on hand. That concludes my review of the financials for the first quarter, and I'll turn the call back to Bruce.
Great. Good job on the quarter, Tim, and his team. All of that coupled with New York Stock Exchange has made for an active quarter for the finance team, and I appreciate your work. With that, I'll open it up to questions, please.
Ladies and gentlemen, we will now conduct a question-and-answer session. If you would like to ask a question at this time, simply press star followed by the number one on your telephone keypad.
I should clarify that I and Tim will be taking questions. Rob has already provided his input, I thank him for that.
Your first question today comes from the line of Tamy Chen with BMO Capital Markets. Please go ahead.
Thanks. Hi, Bruce and Tim. I had a couple of questions on the Constellation announcement. Firstly is, you're getting a big inflow of capital about CAD 5 billion, which is quite substantial. Could you discuss a bit more about how you're thinking about where and how you intend to deploy that?
Sure. We're not putting out hard guidelines on it, but when we look at our current target acquisition list, it exceeds CAD 1 billion for international, and I'll call it non-cultivation assets. We know that that list will grow. We're getting ready for other markets to open up, so we want to have a little cash on the balance sheet for things like U.S. if it comes around. We also know that based on what's happening in Germany and a number of the other places, the RFPs are coming back out and the build programs are substantial. I mentioned earlier, if you look at our assets in Canada, it's about CAD 1.4 billion of real assets to serve this country. We see what we have to put together from Germany to Chile, Australia to some of the activities we're supporting in other European areas.
We'll use quite a lot of that up, then we'll have a much bigger asset base to have a much larger yield on. I think you'll like what you see as far as our targets that we hit as far as acquisitions over the next 6 and 12 months. Assuming we close on some of those, I think you'll see that that makes quite a lot of sense.
Okay. Got it. Thanks. The second question is, has Constellation secured any rights to participate in future equity financings of yours so that they can stay above the 50% on a fully diluted basis stake?
Right. Assuming they exercise the current warrants, which will get them to about 16.4%, this transaction takes them up over 38%. The way it's structured is that there is an additional two pieces of an instrument. There's a second warrant that would move them to approximately 50%, and that's priced in the press release. Then there's a final, I'll call it a VWAP future unstated price, additional 5%. Through the process, we've built a mechanism so that as we make further acquisitions, there's an opportunity for a quarterly top-up so that they can retain their then current percentage and I would call it almost sort of a normal course, right to maintain and not be diluted, and the mechanics are in there.
Okay, got it. Lastly, if cannabis is completely legalized at all levels of the U.S. government, could you talk a little bit about how you would approach that market, both the medical and the recreational sides?
Sure. There's a bunch of scenarios under which that might happen. It could be, as you described, it could be state by state. What's going to happen, I think, however, is that, if you have intellectual property and clinical trials and results that show medical efficacy, you're going to be able to take those through, especially if the intellectual property protection does as we do, which is it starts with a U.S. first filing, that you have a suite of products that then need production assets and the whole supply chain. What we've learned in Canada is how to do scale. I think what you'd find is, if California became a federally permissible place, you kind of need essentially one Canopy asset group from everything we've got dropped into there to produce all the products that we'd want to take to market.
There will be some markets where there are brands that we would perhaps buy, but there really aren't scale production assets. We would create those, and I think we'd have an accelerating advantage in the event that occurred. That would then take us into everything that's a strength of ours and Constellation, which is if you have legal, medical, and legal rec, part of the chain is the product, but part of it is the delivery system, the support infrastructure, the sales reps, all of the things that make you successful in a CPG. Then the second part is, we think that our medical approach, and we've expanded our team to include internationally capable and recognized pharma leaders who are joining us.
That team, I believe, is going to do a very good job in creating everything from NHP products, natural health products, right through to finished RX trials. Those are going to be designed and delivered so that they aren't just for Canada or just for Germany. I think it'll give us a material advantage into that segment. We feel good about the cash coming in because there's a lot more work right now than we had capital and capacity. This accelerates it. We also get to draw down on resources at Constellation. Part of the structure of this deal is that anything that they have that we need, we have a services arrangement where we'll try to orderly access and use so that we can accelerate with them as part of our team.
That is, I think, going to be quite a good bit of leverage.
Oh, got it. Thanks. That's very helpful. Those are all my questions.
Your next question comes from the line of Martin Landry with GMP Securities. Please go ahead.
Hi, good morning, and congratulations on that investment.
Thanks, Martin.
Just wondering, to follow up a little bit on the capital deployment. It was helpful that they give us a little bit your acquisition pipeline, but wondering, how long do you think it could take you to deploy that CAD 5 billion of cash inflow? Maybe if we look at the next 12 months, and under your ideal scenario, how much capital would you have deployed?
We're not benchmarking against it, but I'll put a few more buckets out there for Martin. Ontario, how many stores might we get? How many do you build out? As we stack our medical trials and we start rolling those out, and I think that once you have stabilized ingredients, the ability to deliver and design many more trials accelerates. We've got both animal first one out and human first one out. I don't think it'll be a big gap to have multiple others that could line up behind it. We're not pacing it out, but I suspect as eyes watch us each quarter, you will see strategic investments that often acquisitions or build out will use cash now, not dilutive shares. On our quarterly calls, we'll check against what did we get done, and I think you'll find that that list moves very quickly.
We have been on the M&A and build-out review, looking at assets around the globe for about a year. With Constellation's team to assist us in executing some of these M&A transactions, because Rob Sands has been clear. This is where they're placing their bet. They're not now looking at any other M&A, even in their sector, for some time. That team comes to us. I don't want to give you, "It'll be this much by Tuesday," but I suspect we will move quite quickly. We've done to date, Tim might be able to remember the exact number, but I think we're on acquisition number nine inside of Canopy already, so we're pretty competent at that.
Okay. Is the ultimate goal for Constellation to take control of Canopy in time?
I can't speak to their ultimate goal, but I suspect if we do what we're going to do, which is build a global platform that generates massive amounts of EBITDA over the next few years, that is a pretty amazing company that everybody would think is a good one to own.
Mm-hmm. Then just to switch back on the Canadian market and what's coming up with the recreational-
Sorry, Martin, I should be clear. The way we've structured this, right, they're buying about 25% for about CAD 5 billion right now. I, as a shareholder, like the race ahead because to your earlier question, what this is about now is about how much can we build, how great can it be, and what does that do to the value of the company? Because the alignment we have with Constellation is on winning, and that should work pretty well for the small shareholder, including me, in terms of what this looks like for the next tranches.
Okay. Just to switch to the Canadian market, the domestic recreational market, I think you've won supply agreements for up to 67 tons
Over the next year, that excludes Ontario, if I understand correctly. Right now, I think you have around 20 tons of dried cannabis in place. Do you have enough inventory to fulfill the first shipments from the provinces, or are you going to need to bridge some of that?
Tim can talk about this more converting into inventory and what we have as a product mix. The question is going to come down to, I think we have enough subject to, what do they order? Right? Part of the reason we've kept a single shipping center is how to manage inventory and how to ship it out, but the pipeline is empty. What proportion of the product are they going to want in dried cannabis, containerized, rolled cannabis, gel caps, or oils? It's going to be a continuous shifting of orders, inventory, and matching it. We're already starting to see some of the provinces putting up their first indication of what they want. I will tell you it's probably going to drain everything, but I think we'll be able to balance it.
The real question is when do they reorder and how much do they reorder? We're juggling that now. We only have two provinces that have sort of started to give us a positive indication of when they want to order and what quantities, we're working through that.
Okay. Thank you.
Your next question comes from the line of Graeme Kre with Eight Capital. Please go ahead.
Yeah. Hi, good morning, gentlemen. Bruce, you gave a bit of an overview of sort of what the long-term vision is for the company, and obviously focusing on the large opportunity in medical. Can you just give some more color around reconciling the medical opportunity in the international markets that Canopy Growth has in front of it versus Constellation Brands being involved in beer, wine, and spirits and having a number of established brands there. What's bridging the gap between that medical opportunity and more of the consumer focus in Constellation Brands?
Sure. The people, and Graeme, you've been around it for a bit. The way the platform gets built is that it focuses on a patient. No country of a material nature is going to necessarily open up and say, "We don't have any medical program, but we're going to have a cannabis party." I think what you have to look at is the medical becomes the operational platform that creates the assets that can create the ingredients to create medical outcomes, but then they can quickly increment to CPG. CPG turns those ingredients into brands, formats, and outcomes that people want so that they have better occasions.
I think that what I like with Constellation Brands is they've spent quite a lot of time with us and observed how Canada's evolved, and probably you would place bets that a whole bunch of countries around the world, if you're in the dominant in the medical, you have all the production assets necessary to take it up to CPG. That, I think, is kind of where you could see the bridge. If you come on a tour of our facility, when you go to our Section 56 exemption lab, you can have people taking ingredients from cannabis and creating a diversity of things. It could be from what could be used for an animal product to a human medical to a beverage that looks amazing and sits on a shelf and stays in suspension for quite some time, maybe forever.
That's where you go from having a managed ingredient market where people want to call it, is this going to become a commodity? No, it is going to become a regulated ingredient, and it's how they vertically change over the different markets. I think there's good alignment with Constellation Brands as we ramp out and build Canada. Because if you're dominant and create great brands in Canada for the adult access, those brands and learning programs are going to, I think, carry quite a lot of weight as we go into other geographies.
Okay, thanks. Just one other question. For those of us who are uninitiated on the specifics for Constellation Brands, what's their plan on actually funding the CAD 5 billion investment?
I believe there's a note in the press release that points to the source of capital. Tim, I don't have it in front of me, I read 26 versions of it, I can't remember if that ultimately stayed in. Is it referenced in there?
It was. Bank of America, Merrill Lynch is providing the financing for the transaction. You'll find it in the third last paragraph of the press release.
Okay. Thank you very much, gentlemen.
Yes, please do read through that. Those are some interesting names to be associated with us in the cannabis space. I think that's.
Sure
Quite remarkable.
Your next question comes from the line of Dara Mohsenian with Morgan Stanley. Please go ahead.
Hey, good morning, guys. Bruce, the total addressable market opportunity you mentioned in the slide deck of CAD 200 billion by 2032, or I guess greater than CAD 200 billion, that was very helpful, but I was hoping for a little more detail as you think about the size of the addressable market over the next five or 10 years. Said another way, how quickly do you think that addressable market ramps up towards that CAD 200-plus billion goal in 2032 as you look out over the next five to 10 years here?
Sure. What is that market made up of? I think right now that number is a proxy for switching people from an illegal purchase program to a legal purchase program. I'm not sure that that number's a very accurate proxy for the disruptive nature of what could be created in terms of the true finished products that are unique and different in medical and rec. I think the number could in fact be quite a lot bigger than that. The rate of ramp, well, let's just use Germany. This quarter, if we look back four or five quarters ago, there was zero happening in Germany. This quarter, we did, what, Tim, about CAD 3 million?
Yeah, CAD 3.4 million, yeah.
CAD 3.4 million. This is where the government largely is the party paying for the cannabis as a medicinal ingredient. That rate of growth, as we get more formats and more responses and indication claims, I think increasingly ramps up. I would be surprised if the rate at which this is changing, three, almost four years ago, there were about four or three countries trying to figure out how to regulate this at a federal level. There's about 29 now. If those countries continue on a path of growth, if you look at Canada, we've gone from 30,000 patients in an old scheme, maybe 35, to maybe 350,000 or 400,000 medical patients in a period of about four years, and we're about to add, you pick a number. We got 35 million Canadians. Are we going to have five million who are interested in rec?
Two million? Eight million? I'm not sure what the number is. I think people are going to have to build models, and the models should be driven on which countries are going to move to a medical, who will be the payee, and when will Canopy have medical claim products that can file under pharma insurance. With those countries, which ones are likely to have an electoral event that allows them to move to managing a recreational market. I believe it's a lot closer in a lot of countries than people think, because this is going to be pointed to at Canada. It's going to be a evolving success here. I think the market rate of growth, you can probably bring that number way back very soon. That's up to you to create a model.
We just have an outside date of, what is it, 2032. Pretty far out.
Right. That's very helpful. Then as you think about your positioning in the industry, obviously there's a lot of capital coming into this space and a lot of competition. Help give us some background on why this partnership is potentially the leading player in this space as we look out over the next 20 years or so, and how you're sort of positioned versus that competitive set, and maybe what some of the unique capabilities are on your end.
We're at this now. We'll be on a call in a year, 18 months. When you say the competitive set, it won't be any of the cannabis names that are started up in Canada. It will be big pharma. It'll be other packaged beverage. A day doesn't go by without somebody sending me an article that the Wrigley family are looking at this. Everybody's looking at this. I think when you talk about competitors and why we're doing this now, we have a great position and a great start. This is about accelerating and getting way further out there before those other big names are in. Getting our products, staking our claims, having the leverage that we have now and moving up.
I bet the competitive set names you use are big known names, and they have to get in the space because this is the most disruptive, rapid growth opportunity for EBITDA that any of them are looking at. It's going to get big, and they're going to get good. We're going to be way ahead.
Great. Thank you. Appreciate it.
Your next question comes from the line of Matt Bottomley with Canaccord Genuity. Please go ahead.
Good morning. Congrats on the announcement. Don't want to beat a dead horse here, but just a couple of more questions on the potential deployment of capital here in the near term. Bruce, where do you see the Maybe when you line up what Constellation brings versus what you've been able to achieve in the Canadian market, what are some of the holes, for lack of a better word, even with respect to those two parties, that you might need to go and acquire assets to fill? Is it more on the medical technology side? Is it more on boots on the ground, getting licenses in various countries? Just any more color on where you think you need to go out and increase your exposure.
Depending on the country, and what you have for the vertical stack, it could be things as simple as, we're not interested in sharing our margin with a pharma play. We'll probably find a little down-on-their-luck biotech company that could do a lot of that lifting for us. That could be a nice fit. In certain geographies, it's starting with base real estate and moving up through the stack, but we move up through it a lot more quickly with what we'd have to put in. We have an expansion of technology. Suppose we get through rec, October 17th happens. Suppose that the government decides they, in fact, are going to do what they said they'll do and have to do, which is increase our product set so that we can actually compete more effectively with the illicit market.
I bet I need a bottling line if I want to have beverages in a great bottle. You could see where you'd spend on that. Those things take off, all of a sudden, multiple geographies need the same set of products, which need the same set of production growth assets, extraction assets, labs, lines. This is where it goes. Canada, we're looking at bottling lines. In other countries, we're looking at greenhouses. I think when you're currently in 11 countries and you can see the map going quickly up to more than those, you start to understand where the pieces would fit together. It is a bit of a rinse and repeat. Once you got it right at scale, you can accelerate it in every other country.
Okay, great. That's helpful. Maybe just more on the U.S. market as well. Obviously, you guys have been clear that there's no plans to enter there until it's federally legal, that's a very fast-moving market as well that's evolving day by day. How much is Canopy, I guess, investing in terms of its time in following these markets and aligning itself where if the opportunity arises, there could be a potential huge opportunity there as well?
Yeah. We have and have had a team, now with Constellation, have a bigger team that has a very specific mandate to be ready, which can mean everything from having options on things to preparing with the right tech. The U.S. is the best market for sure. No one in there right now can go to scale. All of the conditions created by it being federally legal mean that you have probably an inverted model where there are too many producers, too few proper processes and very fractured product sets across multiple geographies. If and when it becomes permissible, scale will mean quite a few things change from the cost of production through the quality of the product, that you'll be able to create universal brands that actually are the same when people go anywhere in any state.
I think that is exactly where we'll play very well with Constellation, if and when we can.
Okay. Just moving north of the border to Canada. It seemed clear in your press release that you guys are previously already fully funded for everything you wanted to do in Canada. What's your view on the climate right now from an M&A standpoint? Is there anything that interests you on M&A, or do you think just the cash that you now have from Constellation can really fill in any holes that you might want to true up in Canada?
We don't need any production assets, for sure. Part of the reason is we've figured out that it's actually more efficient to take everything we've learned after 200 and some odd number of inspections from Health Canada and apply that to the design creation of our own assets. As you saw when we leased, then bought the assets in British Columbia, with the greenhouses. That program began December 1. About February 17th, we had our first plants and licenses going. There's nothing on a production basis. Obviously, real estate, locations, vertical integration, that makes sense. I think in Canada it's going to be more of accelerate our own build than it is acquire any incremental cannabis asset.
Okay, thanks. Just one last quick question, if you don't mind, on moving away from this deal specifically. Just curious on your key takeaways from the Ontario's press conference the other night with respect to retail. I'm still trying to juggle in my mind, how much of this is going to be open to the LPs versus maybe more traditional retail like grocery stores or pharmacies or even some of these illegal dispensaries if they stop immediately dispensing. Is it all up in the air right now, or do you have a more concrete view as to how much the Canopys of the world are going to get involved in retail in Ontario?
I think everyone is going to be wanting to be in. That doesn't mean everybody gets in. The reason we ended up being selected in three provinces already is, if you're going to be a retailer of cannabis, do you have an educational training platform? Yes, we do. In fact, ours has been used by other provinces to train their retail staff. Do you have the appropriate controls and age gating practices? Do you have security cleared people to manage and handle all of the processes around transit of cannabis, et cetera? I think we're the most well qualified to win. We won't win all of them. I would suspect that the model they're going to adopt is probably more similar to Alberta, Saskatchewan, Manitoba, and Newfoundland than it will be BC.
I like the announcement because what was going to be a problem in Ontario was that there were going to be very few stores and there were going to be a very slow process to have more stores. The province is very good at inventory management and warehousing, and they can make their money there. The effect will be that while there may be no stores October 17th this year, but if they wanted 400 stores by October 17th next year, that wouldn't be a particularly big push for the private sector to deliver that even much earlier. When all the stores roll out is when we will have the next wave of product rights, meaning vapes, probably ingestibles that can include a beverage, we would expect. Now there'll be way more points of sale.
I was smiling when the announcement occurred because what we're going to have is a great retail platform, us and others, to sell great products, which is what we're creating. I think that that is going to be way more important than having 40 stores from the province. It's a little bit of a short-term hit to launch things the way I'd like to see them.
Okay, great. Thanks, Bruce.
Most provinces check if you're a criminal. Every province we've been awarded stores, we've had to give as much as three years back history on our personal incomes and spouses and total assets. I suspect if you're currently breaking the law, the likelihood of meeting the criteria of getting a license is pretty low.
Your next question comes to the line of Andrea Teixeira with J.P. Morgan. Please go ahead.
Hi. Good morning. Bruce, I have two questions, please. One is to understand, from your prepared remarks, that 100% of the use of proceeds will be international, and also, as you mentioned, you don't need more production capacity. But you also mentioned California, so would you make acquisitions in the U.S., given it is still federally illegal? And I think that would be different from what Constellation had said before.
No. I should be clear. We definitely do not participate in federally illegal markets. I use California as an example of scale, but until it's federally legal, we will not participate in a market. I should have been more clear if I wasn't, that is 100% been our platform and has been since day one.
Thank you. One more on housekeeping, and I'm sorry, too, because it wasn't clear in the release. I'm trying to calculate the fully diluted number of shares now, right? As you get the warrants that Constellation already had, the 18 million shares they had, and then you do the math, and correct me if I'm wrong, I get into about 324.7 million shares now without the new warrants.
Yeah.
Is it fair to assume Sorry, just to the CAD 5 billion divided by this number of shares, you just got about CAD 15 per share. Is that the way we should think?
No.
They're incrementing their ownership position from just under 15% by 25 percentage points.
Yes. We get into the number of shares that you just announced today, and you make an addition in the number of shares and the warrants that they converted. I just wanted to go back with the warrants that they converted before the infusion of the cash. Because that's not additional money.
I'm assuming, right? That is the money that they already committed before. In addition to that, they're putting CAD 5 billion. The new warrants will be an additional CAD 4.5 billion. Is that the way to think about it?
Let me. While Tim digs up the share count. When I indicated our principal interest is international, what I'm not buying in Canada, it's not necessarily 100% of my money will not be used in Canada. What I'm not buying in Canada are production assets. It doesn't mean that I might not need specific real estate assets for retail or other things of that nature. I want to clarify that. On the warrants, they have not yet been exercised. One half of them has an immediate right or access to them. The CAD 245 million was divided in 2 tranches, one which was eligible to be exercised this month and one which is accessible in early 2019. Tim can go into the model, but those haven't yet converted. Obviously at CAD 12.97 per unit, they're in the money and would convert.
If you're looking at numbers at the end of June, there's other transactions that have happened since then with the acquisition of the remaining shares of BC Tweed and CHI and the like. When you bake in all of the ESOPs, stock options and the like on a fully diluted basis before this, on a pro forma basis, about 268 million fully diluted shares outstanding. You're incrementing that by the investment of 104.5 million shares from Constellation Brands, which gets you That 104 million is the extra 25%, that gets them out to about 38.1% at this investment with a little over CAD 5 billion. The warrants, as you said, is incremental money that could be exercised over the next 3 years.
The purchase price-
The way-
on those shares is the new shares, the purchase price is in the release. It was CAD 48.60 per share.
For the new shares, correct.
Per share. The way we can get the math, simply take the 104 divided by 38%. We get into the fully diluted. It was just like, as you were saying.
Correct
There were so many transactions. I'm assuming that triggered a lot of different options exercises, as you correctly pointed out, that we don't know. It will be helpful to have a fully diluted number of shares in the next few months so that we can kind of calculate money in, money out.
Yeah.
How-
Yeah.
Okay.
No, that's good advice. We will. Because of the number of transactions we do in this transaction, as things get topped up, we will be specific in our go forward quarterlies, where we are in terms of total share count and what contributed over the quarter.
Okay, wonderful. Thank you.
Your next question comes from the line of Alan Brochstein with New Cannabis Ventures. Please go ahead.
Hey, guys. Congratulations.
Thanks, Alan.
Just a couple of quick ones.
Did we lose Alan?
We lose Alan, I think we, yeah.
Your next question comes from the line of Todd DuVick with Wells Fargo. Please go ahead.
I'm not sure if your phone system's functioning well.
Mr. DuVick, your line is open.
Hello?
Your next question comes from the line of Timothy Ramey with Pivotal Research. Please go ahead.
Good morning. Thanks. Can you hear me?
I'm very happy to hear you.
Okay, thanks. I live in the state of Oregon, which is a legal state. I think you spoke to this a minute ago, but I'd love to have you flesh it out a little bit more. It appears that there is some oversaturation of the market right now. I guess your point of view would be that these players are not going to be the players, the competitive set that would exist in five years, that big pharma or yourselves or whoever comes in when it is a federally legal market would supplant the existing. Can you just talk about the idea that there has been some oversaturation in the early development in legal states?
Yeah. There may be a place where the supply chain incorporates the producers. When we talk about cannabis in Canada and when we report on it, we've changed how we report on it. We used to report how many grams and everything was about cost per gram and grams. The problem with that is we actually think about milligrams, active ingredients. The producer of the active ingredients could be some of the cohort that currently produce. Where we make our value and what I think our specialization is going to be evolving to is the ability to convert those milligrams into medical and non-medical recreational products that people prefer over anything that's on the market today.
It's because if you run things through a true medical program and you can make claims and you can create the consistent outcome, people want that. I don't know that calling it medical marijuana without having the appropriate level of diligence in creating truly medical outcomes is doing it a big favor. I think that'll be disruptive. The Constellation package with us on making consistent quality products, whether they're beverages or vapes or others, is going to be a big deal. Saturation, I think, is a problem if you don't have proper conversion. Proper conversion is a problem if you don't have a strong and big platform to do the things I just described. Even at a saturated rate, what's the average price per gram in Oregon now? U.S. retail, what would you pay? CAD 7, CAD 8, CAD 10?
I have no idea.
Yeah, when we hear saturated price rate in Canada, when we do a large platform of production, when we're last reporting it, you start to see cost per gram going well below CAD 1 for production in a highly secured platform. I think, the saturation thing is more about the ingredient than it is the finished good, and we're actively moving way up from the ingredient.
Okay, just relative to Canada, I think I heard you say you didn't need production assets, which sounds like grow greenhouse type assets. I also heard you say you do need potentially bottling assets and things like that. I just wanted to kind of parse that out. There will be incremental delivery methods that don't exist today, can we assume?
Mm-hmm. Yeah. We have about 6 million square feet of planned or completed production assets. About 70% of that are greenhouses and about 30% are indoor, think of large factories. The greenhouse platforms that get used in Canada can be quite substantial. We have a set in the West Coast that one grouping of greenhouses is about 1.7 million square feet. The other is about 1.3 million square feet. Our smallest greenhouse array is about 700,000 square feet. That's kind of the scale of that sort of production. What we're talking about are much smaller square footage assets that are in the business of converting the output of those large platforms of production into the finished goods that I described earlier. Those can be quite costly platforms when they're GMP, Pharma 1 type platforms.
They're costly per square foot, but you use far, far fewer square feet.
Great. Thanks for your help.
No problem.
Your next question comes from the line of Alan Brochstein with New Cannabis Ventures. Please go ahead.
Hey, sorry about that, guys. They butchered my name so bad, I thought I'd give it another try, and they butchered it again. Thanks for taking my call. I don't even know if you heard the last one. I don't believe I did.
We did not.
Okay. Bruce, you've been pretty pessimistic about the timing of legalization in the United States, and I know this deal is about more than just the U.S., but that's obviously a key part of Constellation's interest. Have you changed your own views at all? I know things change quickly.
My views are evolving, I think the more that we've interacted with different regulators, I could see state by state happening much sooner than later. I'm not sure that you're going to see a national platform, but I could see some state by state structures that would make it federally legal if it was legal in the state. Best to be very prepared. Our laydown plan is have all of the working pieces together and be ready to go when it's legal and bring scale and bring products.
Got it. I've gotten this question a lot. I don't think you guys have publicly addressed it, shareholders just approved a potential stock split, I was just wondering what that's all about.
Optionality. I was thinking at that time that we had the right to do an up to three times split, that is parked. It was one of those things that I prefer to have the optionality because it was a special shareholders' meeting, which was also to enable us to increase the ESOP pool. Added that, we have in our pocket, those things don't really stale date for at least a year.
Okay. The next one is just more about the near term on the financials, Tim. Thanks for breaking out, as you guys have been doing, some of the extra costs that go outside of Canada and as well as the always confusing biological asset stuff. Are the operating losses, excluding those other factors outside of just two I mentioned, do you expect them to continue to trend higher, Tim?
I think you're going to see, certainly domestically, as we started to get recreational orders in the provinces, I mean, the revenues number's going to go up and cover. That'll reduce the losses. We still expect, as we've indicated previously, that we'll be EBITDA positive really very shortly in the near term. Like you said, those losses you're seeing today, that's as if we're spending for a rec market that's not there today as against medical revenues. You should see that all come down.
That's all I have. Thanks a lot. Congratulations again on the deal.
Yeah.
Thanks very much, Alan. Why don't we take one more question if there is one, and then we can all get on to our next activities.
Your final question comes from the line of Robert Ottenstein with Evercore ISI. Please go ahead.
Great. Thank you very much. You were very clear that you don't want to participate in any federally illegal markets. I get that. California is arguably the largest market right now. You want first-mover advantage. Heineken has found a way that they believe that they're comfortable in terms of participating in that market through Lagunitas. Can you tell us a little bit why you are uncomfortable finding some sort of legal or corporate mechanism to participate in California, and how you're thinking about this?
We're not really keen to divulge exactly where we're going, but for sure, we're going to do everything that is fully federally lawful to be available in a market. We think there are mechanisms of action that we can take, that we're working through. There will be nothing federally illegal in what we do. I'm not sure. We've looked at all the actions of others, and I think some of them may have crossed the line, but I think that it may become federally legal sooner than people think, and that we'll be more ready than probably is understood at this time. I know I'm being general, but part of the reason we do these calls is so that people who are in the sector can understand what we're doing, and then they try to follow us, which has been a good practice in the past.
We're going to be a little bit more coy on this one.
Got it. Obviously, you're looking at California very closely. You understand what's going on there.
Oh, yeah.
Do you think that the California regulatory framework is the one that's most likely to be adopted in other states? How would you assess how things have developed in California year-to-date?
Yeah. I'm not an expert on California, but we do find it quite interesting when we observe things like when you really do apply a controlled system, what happens to the total number of distribution points, what happens to the quality of the product and the failure rate of testing of product that was permissible before. I think you start to see a much more effective control system. We hope that the level of controls is high and gets higher everywhere because the client is not going to be satisfied if the quality of the product is inconsistent, if it has pesticides or sprays, if it's failing. I think you're seeing in California, or have seen, that there has become a shortage in the sense of product because of active testing that says this is not of the quality or standard that's permissible.
I hope that standard is what they do across the U.S., and it wouldn't hurt if it was a little higher because the chain of custody on product is key to actually squeezing out the illicit market, and there's a bit more that can be done, I think, in most states' regulations on that.
Great. Well, look, congratulations. You've got a terrific partner in Constellation, very eager to see how things develop. Thank you.
Well, thank you. You're right. I suspect after this call, we can get back to work with Constellation. That is kind of why the cash came in, because we work very well together. Thanks to everyone for the call, and look forward to doing the next quarter.
This concludes Canopy Growth first quarter fiscal 2019 financial results conference call. A replay of this conference call will be available until November 13th, 2018 can be accessed by following