Canopy Growth Reports First Quarter Fiscal Year 2024 Financial Results
- Net revenue in Q1 FY2024 increased 3% year-over-year to $109 million
- Cost savings of $172 million achieved through Q1 FY2024
- Sequential revenue growth in all business segments in Q1 FY2024
- Adjusted EBITDA loss in Q1 FY2024 was $58 million
- Free cash flow in Q1 FY2024 was an outflow of $151 million, a 6% increase in outflow versus Q1 FY2023
Net revenue in Q1 FY2024 increased
Achieved total cost savings of
Management reaffirms its expectation to achieve positive Adjusted EBITDA in all business units exiting FY2024, with the exception of BioSteel
Highlights
- All business segments of the Company delivered sequential revenue growth in Q1 FY2024, compared to Q4 FY2023.
- Achieved cost reduction of
in Q1 FY2024, bringing total cost reductions to$47 million since the beginning of FY2023.$172 million - Consistent supply and strong demand for high-quality flower elevated the Tweed brand to the #8 rank within the total flower segment of the Canadian adult-use cannabis market in Q1 FY20241, moving up 19 places year-over-year.
- Canadian cannabis business continued its transformation to simplified, asset-light model in Q1 FY2024, building on the divestiture of national retail operations, closure of eight cultivation facilities to focus on two purpose-built cultivation sites and outsourcing of vape, beverage and edible production to independent, third-party Contract Manufacturing Organizations ("CMO").
- The Company continues to focus on simplifying its businesses and reducing cash burn; currently reviewing strategic options for BioSteel Sports Nutrition Inc. ("BioSteel"), including a potential sale of the business, in order to remove the cash burden to Canopy Growth as quickly as possible.
- Entities that are expected to be acquired by Canopy
USA , LLC ("CUSA") continue to demonstrate momentum and Canopy Growth continues to work with regulators to advance its novel structure.
"Our performance in the first quarter of Fiscal 2024 validates the difficult but transformative changes we made over the last twelve months. Canopy Growth's businesses demonstrated stability, consistency, and signs of positive momentum, while realizing a substantial reduction in expenses across the enterprise. Our asset-light approach is enabling the agile execution of business initiatives, allowing us to move faster and to be more responsive to consumers."
David Klein, Chief Executive Officer
"With sustained momentum in our core businesses and our cost reduction program, we believe we are on a path to achieving positive Adjusted EBITDA across all our businesses, except BioSteel, exiting Fiscal 2024. The decisive actions we took over the past year are driving significant reduction to ongoing costs across our operations. We also remain focused on opportunities to strengthen our financial position through further reducing cash burn, monetizing non-core assets and reducing debt."
Judy Hong, Chief Financial Officer
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1 Unless otherwise indicated, market share data disclosed in this press release is calculated using the Company's internal proprietary market share tool that utilizes point of sales data supplied by third-party data providers and government agencies. |
First Quarter Fiscal 2024 Financial Summary
(in millions of Canadian | Net Revenue | Gross margin | Adjusted | Net loss | Adjusted | Free cash | |
Reported | 5 % | 5 % | |||||
vs. Q1 FY20232 | 3 % | 1,000 bps | 700 bps | 98 % | 27 % | (6 %) |
__________ |
2 As Restated |
3 Adjusted gross margin is a non-GAAP measure and there were no adjustments for Q1 2024 (Q1 FY2023 - excludes |
4 Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures" and Schedule 5 for a reconciliation of net loss to adjusted EBITDA. |
5 Free cash flow is a non-GAAP measure. See "Non-GAAP Measures" and Schedule 6 for a reconciliation of net cash used in operating activities to free cash flow. |
Revenues:
Net revenue of
Gross margin:
Gross margin in Q1 FY2024 was
These increases were partially offset by: (1) a decrease in the amount of payroll subsidies received from the Canadian government pursuant to a COVID-19 relief program; and (2) a decline in the BioSteel segment primarily resulting from aging inventory write downs, higher warehousing costs, and higher production costs associated with the BioSteel manufacturing facility located in
Operating expenses:
Total selling, general and administrative ("SG&A") expenses in Q1 FY2024 declined by
Net Loss:
Net Loss in Q1 FY2024 was
Adjusted EBITDA6:
Adjusted EBITDA loss in Q1 FY2024 was
Free Cash Flow7:
Free Cash Flow in Q1 FY2024 was an outflow of
Cash Position:
Cash and short-term investments amounted to
__________ |
6 Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures" and Schedule 5 for a reconciliation of net loss to adjusted EBITDA. |
7 Free cash flow is a non-GAAP measure. See "Non-GAAP Measures" and Schedule 6 for a reconciliation of net cash used in operating activities to free cash flow. |
Business Highlights
Transformation to simplified, asset-light model is working, delivering significant cost reductions
- Combined SG&A expenses and Cost of Goods Sold ("COGS") reduced by
in Q1 FY2024, and when combined with the reduction of$47 million in FY2023, bringing the cumulative cost reduction total to$125 million .$172 million - Management continues to expect restructuring initiatives announced in FY2023 to deliver combined SG&A and COGS reduction of
to$240 by the end of FY2024.$310 million - As a result of the Company's Canadian cannabis business transformation initiatives executed to date,
Canada cannabis gross margins improved by in Q1 FY2024 compared to Q1 FY2023, notwithstanding a$12 million reduction in net revenue.$14 million - The Company continues to review and consider its options with respect to the monetization of non-cannabis and non-core assets, including BioSteel, and remains focused on improving profitability, balance sheet strength and liquidity.
Enhanced commercial execution driving growth in
- The Company's Tweed brand captured
3.1% share of the total flower segment in theCanada adult-use cannabis market in Q1 FY2024, representing a 202 basis point ("bps") improvement year-over-year. The Company continues to see growing demand for high-quality Tweed strains including Tiger Cake and Kush Mints. In Q1 FY2024, Tweed Kush Mints 28g was the fourth best performing flower SKU inCanada . - Canadian medical cannabis revenue increased
7% year-over-year primarily due to an increase in the average size of medical orders placed and a larger assortment of cannabis product choices offered to registered medical patients. - In Q1 FY2024, Canopy Growth entered into certain agreements to control and execute the distribution, marketing, and sales of industry leading Wana branded cannabis edible products in
Canada . Subsequent to the end of the quarter, the Company announced that Wana branded gummies are now available to its registered medical cannabis patients through Spectrum Therapeutics. The Company expects the addition of Wana products to the Company's product offering in the Canadian cannabis market to be immediately accretive to its Canadian cannabis revenue and profitability.
Consumer products businesses delivered strong performance in Q1 FY2024 with BioSteel and Storz & Bickel delivering significant revenue growth; Storz & Bickel preparing to launch new vaporizer line in the fall of 2023
- BioSteel delivered fourth consecutive quarter of growth, with Q1 FY2024 net revenues increasing
137% year-over-year and68% sequentially. - Strong consumer demand has increased BioSteel's market share of the convenience and gas channel in
Canada to11.3% , up 690 bps year-over-year, and increased market share inOntario to13.1% , representing a year-over-year increase of 620 bps8. - Distribution gains in
the United States has helped increase Storz & Bickel revenues16% year-over-year to in Q1 FY2024.$18 million - Innovative, new line of Storz & Bickel vaporizers being prepared and anticipated to launch in the fall of 2023 are expected to drive revenue growth.
- In June 2023, Wana9 re-entered the
State of Florida , marking the 15th activeU.S. state or territory for the brand. Through its collaboration with Surterra Wellness inFlorida , Wana brand's premium cannabis-infused gummies lineup, is available toFlorida patients across 45 medical cannabis treatment centers in the state. - In July 2023, Jetty10 introduced its award-winning vape products into the
State of Colorado , its thirdU.S. state after more than a decade of leadership inCalifornia . Earlier in August 2023, Jetty expanded its product offering inCalifornia with the launch of the market's first OCal Certified (California cannabis comparable-to-organic certification) solventless vapes in a variety of Sativa and Indica strains11.
__________ |
8 Nielsen data 13-weeks ended June 30, 2023. |
9 Until such time as CUSA elects to exercise its rights to acquire Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC (collectively, "Wana"), CUSA will have no direct or indirect economic or voting interests in Wana, CUSA will not directly or indirectly control Wana, and CUSA, on the one hand, and Wana, on the other hand, will continue to operate independently of one another. The Company holds non-voting and non-participating shares in CUSA that are exchangeable into common shares of CUSA. |
10 Until such time as CUSA elects to exercise its rights to acquire Lemurian, Inc. ("Jetty"), CUSA will have no direct or indirect economic or voting interests in Jetty, CUSA will not directly or indirectly control Jetty, and CUSA, on the one hand, and Jetty, on the other hand, will continue to operate independently of one another. The Company holds non-voting and non-participating shares in CUSA that are exchangeable into common shares of CUSA. |
Balance Sheet and Liquidity
The Company ended Q1 FY2024 with cash, cash equivalents and short-term investments of
Subsequent to the end of Q1 FY2024, on July 14, 2023, the Company announced that it had entered into a series of agreements with certain of its secured and unsecured lenders, which is expected to further reduce total debt by approximately
First Quarter Fiscal 2024 Revenue Review12
Revenue by Channel
(in millions of Canadian dollars, unaudited) | Q1 FY2024 | Q1 FY2023 | Vs. Q1 FY2023 | |
(As Restated) | ||||
Canadian adult-use cannabis | ||||
Business-to-business13 | (9 %) | |||
Business-to-consumer | $- | (100 %) | ||
(38 %) | ||||
Canadian medical cannabis14 | 7 % | |||
(26 %) | ||||
Rest-of-world cannabis15 | (26 %) | |||
Storz & Bickel | 16 % | |||
BioSteel16 | 137 % | |||
This Works | 9 % | |||
Other | (33 %) | |||
Net revenue | 3 % |
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12 In Q1 FY2024, we are reporting our financial results for the following five reportable segments: (i) |
13 For Q1 FY2024, amount is net of excise taxes of |
14 For Q1 FY2024, amount is net of excise taxes of |
15 For Q1 FY2024, amount reflects other revenue adjustments of |
16 For Q1 FY2024, amount reflects other revenue adjustments of |
Canada Cannabis
- Adult-use business-to-business net revenue in Q1 FY2024 decreased
9% over the prior year period driven primarily by lower sales volumes across our premium and value-priced product categories, which for the value-priced category, is largely the result of a strategy shift to move away from low-margin value-priced products. This decrease was partially offset by increased sales of the Company's mainstream brands, primarily resulting from improved product attributes. Adult-use business-to-business net revenue in Q1 FY2024 increased12% sequentially compared to Q4 FY2023. - Following the previously announced divestiture of the Company's Canadian retail business in Q3 FY2023, the Adult-use business-to-consumer (retail) net revenue in Q1 FY2024 was nil.
- Medical net revenue in Q1 FY2024 increased
7% from Q1 FY2023 primarily attributable to an increase in the average size of medical orders placed and a larger assortment of cannabis product choices offered to our customers, partially offset by a lower number of medical orders.
Rest-of-world Cannabis
- Rest-of-world cannabis revenue in Q1 FY2024 decreased
26% over Q1 FY2023 due primarily to declines in opportunistic sales toIsrael and ourU.S. CBD business, partially offset by strong growth inAustralia .
Storz & Bickel
- Storz & Bickel vaporizer revenue in Q1 FY2024 increased
16% over Q1 FY2023 due primarily to the expansion of distribution and retail channels inthe United States .
BioSteel
- BioSteel sales in Q1 FY2024 increased
137% over Q1 FY2023. The year-over-year increase is primarily attributable to: (1) the expansion of the Company's distribution inCanada within the grocery, convenience and gas station channel and into the large-format club channel; and (2) stronger sales velocity in existing points of distribution ahead of the summer season resulting from increased brand awareness of BioSteel from our NHL sponsorship.
This Works
- This Works sales in Q1 FY2024 increased
9% over Q1 FY2023. The year-over-year increase is primarily attributable to an expanded product portfolio in our "Bodycare" line and continued success and strengthening sales velocity of our "In Transit" skincare product lineup.
The Q1 FY2024 and Q1 FY2023 financial results presented in this press release have been prepared in accordance with
Webcast and Conference Call Information
The Company will host a conference call and audio webcast with David Klein, CEO and Judy Hong, CFO at 5:30 PM Eastern Time on August 9, 2023.
Webcast Information
A live audio webcast will be available at https://app.webinar.net/E7gbkpw16N9.
Replay Information
A replay will be accessible by webcast until 11:59 PM Eastern Time on November 7, 2023 at https://app.webinar.net/E7gbkpw16N9.
Non-GAAP Measures
Adjusted EBITDA is a non-GAAP measure used by management that is not defined by
Free Cash Flow is a non- GAAP measure used by management that is not defined by
Adjusted Gross Margin and Adjusted Gross Margin Percentage are non-GAAP measures used by management that are not defined by
About Canopy Growth
Canopy Growth is a leading North American cannabis and consumer packaged goods ("CPG") company dedicated to unleashing the power of cannabis to improve lives.
Through an unwavering commitment to our consumers, Canopy Growth delivers innovative products with a focus on premium and mainstream cannabis brands including Doja, 7ACRES, Tweed, and Deep Space. Canopy Growth's CPG portfolio features sugar-free sports hydration brand BioSteel, targeted 24-hour skincare and wellness solutions from This Works, gourmet wellness products by Martha Stewart CBD, and category defining vaporizer technology made in
Canopy Growth has also established a comprehensive ecosystem to realize the opportunities presented by the
Beyond its world-class products, Canopy Growth is leading the industry forward through a commitment to social equity, responsible use, and community reinvestment—pioneering a future where cannabis is understood and welcomed for its potential to help achieve greater well-being and life enhancement.
For more information visit www.canopygrowth.com.
References to information included on, or accessible through, website do not constitute incorporation by reference of the information contained at or available through such websites, and you should not consider such information to be part of this press release.
Notice Regarding Forward Looking Statements
This press release contains "forward-looking statements" within the meaning of applicable securities laws, which involve certain known and unknown risks and uncertainties. To the extent any forward-looking statements in this news release constitutes "financial outlooks" within the meaning of applicable Canadian securities laws, the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such financial outlooks. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as "intend," "goal," "strategy," "estimate," "expect," "project," "projections," "forecasts," "plans," "seeks," "anticipates," "potential," "proposed," "will," "should," "could," "would," "may," "likely," "designed to," "foreseeable future," "believe," "scheduled" and other similar expressions. Our actual results or outcomes may differ materially from those anticipated. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
Forward-looking statements include, but are not limited to, statements with respect to:
- the Company's ability to achieve Positive Adjusted EBITDA in all business units exiting FY2024, with the exception of BioSteel;
- the Company's ability to transform to a an "asset light" model and to further reduce costs and to deliver further SG&A and COGS reduction of
to$240 ;$310 million - laws and regulations and any amendments thereto applicable to our business and the impact thereof, including uncertainty regarding the application of
U.S. state and federal law toU.S. hemp (including CBD) products and the scope of any regulations by theU.S. Food and Drug Administration, theU.S. Drug Enforcement Administration, theU.S. Federal Trade Commission, theU.S. Patent and Trademark Office, theU.S. Department of Agriculture (the "USDA") and any state equivalent regulatory agencies overU.S. hemp (including CBD) products; - expectations regarding the amount or frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill;
- our ability to refinance debt as and when required on terms favorable to us and comply with covenants contained in our debt facilities and debt instruments;
- the Company's ability to execute on its strategy to accelerate the Company's entry into the
U.S. cannabis market through the creation of CUSA (the "Reorganization"); - expectations related to our announcement of certain restructuring actions and the the potential success of, and the costs and benefits associated with the Reorganization, as amended;
- expectations regarding the potential success of, and the costs and benefits associated with the comprehensive steps and actions being undertaken by the Company with respect to its Canadian operations (the "Canadian Transformation Plan") including any progress, challenges and effects related thereto as well as changes in strategy, metrics, investments, operating expenses, employee turnover and other changes with respect thereto;
- expectations related to our announcement of certain restructuring actions (the "Restructuring Actions"), the Reorganization, as amended, the Canadian Transformation Plan and any progress, challenges and effects related thereto as well as changes in strategy, metrics, investments, costs, operating expenses, employee turnover and other changes with respect thereto;
- expectations to capitalize on the opportunity for growth in
the United States cannabis sector and the anticipated benefits of such strategy; - the timing and outcome of the arrangement agreement we entered into with Acreage and CUSA on October 24, 2022, as amended (the "Floating Share Arrangement Agreement)", the anticipated benefits of such arrangement, the anticipated timing of the acquisition of Acreage's Class E subordinate voting shares (the "Fixed Shares") and Class D subordinated voting shares by CUSA, the satisfaction or waiver of the closing conditions set out in the Floating Share Arrangement Agreement and the arrangement agreement we previously entered into with Acreage on April 18, 2019, as amended,, including receipt of all regulatory approvals, and the anticipated timing and occurrence of the Company's exercise of the option to acquire the Fixed Shares and closing of such transaction;
- the anticipated timing and occurrence of the Company's annual general and special meeting of shareholders and the proposals to be voted upon by the Company's shareholders including, among other things, the Shareholder Approval;
- the anticipated issuance of the Debenture Shares following the Shareholder Approval;
- expectations regarding the Company's contemplated asset sales and the direction of certain proceeds from such asset sales;
- expectations regarding the laws and regulations and any amendments thereto relating to the
U.S. hemp industry in theU.S. , including the promulgation of regulations for theU.S. hemp industry by the USDA and relevant state regulatory authorities; - expectations regarding the potential success of, and the costs and benefits associated with, our acquisitions, joint ventures, strategic alliances, equity investments and dispositions;
- the grant, renewal and impact of any license or supplemental license to conduct activities with cannabis or any amendments thereof;
- our international activities and joint venture interests, including required regulatory approvals and licensing, anticipated costs and timing, and expected impact;
- our ability to successfully create and launch brands and further create, launch and scale cannabis-based products and
U.S. hemp-derived consumer products in jurisdictions where such products are legal and that we currently operate in; - the benefits, viability, safety, efficacy, dosing and social acceptance of cannabis, including CBD and other cannabinoids;
- our remediation plan and our ability to remediate the material weaknesses in our internal control over financial reporting;
- our ability to continue as a going concern;
- the anticipated benefits and impact of the investments in us (the "CBI Group Investments") from Constellation Brands, Inc. ("CBI") and its affiliates (together, the "CBI Group");
- the potential exercise of the warrants held by the CBI Group, pre-emptive rights and/or top-up rights held by the CBI Group;
- expectations regarding the use of proceeds of equity financings, including the proceeds from the CBI Group Investments;
- the legalization of the use of cannabis for medical or adult-use in jurisdictions outside of
Canada , the related timing and impact thereof and our intentions to participate in such markets, if and when such use is legalized; - our ability to execute on our strategy and the anticipated benefits of such strategy;
- the ongoing impact of the legalization of additional cannabis product types and forms for adult-use in
Canada , including federal, provincial, territorial and municipal regulations pertaining thereto, the related timing and impact thereof and our intentions to participate in such markets; - the ongoing impact of developing provincial, territorial and municipal regulations pertaining to the sale and distribution of cannabis, the related timing and impact thereof, as well as the restrictions on federally regulated cannabis producers participating in certain retail markets and our intentions to participate in such markets to the extent permissible;
- the timing and nature of legislative changes in the
U.S. regarding the regulation of cannabis including tetrahydrocannabinol ("THC"); - the future performance of our business and operations;
- our competitive advantages and business strategies;
- the competitive conditions of the industry;
- the expected growth in the number of customers using our products;
- our ability or plans to identify, develop, commercialize or expand our technology and research and development initiatives in cannabinoids, or the success thereof;
- expectations regarding revenues, expenses and anticipated cash needs;
- expectations regarding cash flow, liquidity and sources of funding;
- expectations regarding capital expenditures;
- the expansion of our production and manufacturing, the costs and timing associated therewith and the receipt of applicable production and sale licenses;
- expectations with respect to our growing, production and supply chain capacities;
- expectations regarding the resolution of litigation and other legal and regulatory proceedings, reviews and investigations;
- expectations with respect to future production costs;
- expectations with respect to future sales and distribution channels and networks;
- the expected methods to be used to distribute and sell our products;
- our future product offerings;
- the anticipated future gross margins of our operations;
- accounting standards and estimates;
- expectations regarding our distribution network;
- expectations regarding the costs and benefits associated with our contracts and agreements with third parties, including under our third-party supply and manufacturing agreements;
- our ability to comply with the listing requirements of the Nasdaq Stock Market LLC and the Toronto Stock Exchange; and
- expectations on price changes in cannabis markets.
Certain of the forward-looking statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.
The forward-looking statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including: (i) management's perceptions of historical trends, current conditions and expected future developments; (ii) our ability to generate cash flow from operations; (iii) general economic, financial market, regulatory and political conditions in which we operate; (iv) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (v) consumer interest in our products; (vi) competition; (vii) anticipated and unanticipated costs; (viii) government regulation of our activities and products including but not limited to the areas of taxation and environmental protection; (ix) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; * our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xi) our ability to conduct operations in a safe, efficient and effective manner; (xii) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; and (xiii) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct. Financial outlooks, as with forward-looking statements generally, are, without limitation, based on the assumptions and subject to various risks as set out herein. Our actual financial position and results of operations may differ materially from management's current expectations and, as a result, our Adjusted EBITDA and SG&A cost savings may differ materially from the values provided in this news release.
By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, risks related to our ability to remediate the material weaknesses in our internal control over financial reporting, or inability to otherwise maintain an effective system of internal control; the risk that our recent restatement could negatively affect investor confidence and raise reputation risks; our ability to continue as a going concern; our limited operating history; risks that we may be required to write down intangible assets, including goodwill, due to impairment; the diversion of management time on issues related to CUSA; the ability of parties to certain transactions to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court and shareholder approvals; the risks related to Acreage's financial statements expressing doubt about its ability to continue as a going concern; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); volatility in and/or degradation of general economic, market, industry or business conditions; risks relating to our current and future operations in emerging markets; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis and
Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management's current expectations and plans relating to the future, and the reader is cautioned that the forward-looking statements may not be appropriate for any other purpose. While we believe that the assumptions and expectations reflected in the forward-looking statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-looking statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by law. The forward-looking statements contained in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements.
Schedule 1
CANOPY GROWTH CORPORATION CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (in thousands of Canadian dollars, except number of shares and per share data, unaudited) | ||||||||
June 30, | March 31, | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 533,266 | $ | 677,007 | ||||
Short-term investments | 37,802 | 105,595 | ||||||
Restricted short-term investments | 9,131 | 11,765 | ||||||
Amounts receivable, net | 128,469 | 93,987 | ||||||
Inventory | 142,064 | 148,901 | ||||||
Prepaid expenses and other assets | 32,492 | 39,999 | ||||||
Total current assets | 883,224 | 1,077,254 | ||||||
Other financial assets | 625,268 | 568,292 | ||||||
Property, plant and equipment | 395,206 | 499,466 | ||||||
Intangible assets | 182,942 | 188,719 | ||||||
Goodwill | 84,385 | 85,563 | ||||||
Other assets | 19,509 | 19,804 | ||||||
Total assets | $ | 2,190,534 | $ | 2,439,098 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 57,554 | $ | 76,234 | ||||
Other accrued expenses and liabilities | 75,425 | 75,991 | ||||||
Current portion of long-term debt and convertible debentures | 252,902 | 556,890 | ||||||
Other liabilities | 65,276 | 94,727 | ||||||
Total current liabilities | 451,157 | 803,842 | ||||||
Long-term debt | 792,132 | 749,991 | ||||||
Deferred income tax liabilities | 1,200 | 357 | ||||||
Other liabilities | 98,540 | 124,886 | ||||||
Total liabilities | 1,343,029 | 1,679,076 | ||||||
Commitments and contingencies | ||||||||
Canopy Growth Corporation shareholders' equity: | ||||||||
Common shares - $nil par value; Authorized - unlimited number of shares; | 8,065,281 | 7,938,571 | ||||||
Additional paid-in capital | 2,500,040 | 2,506,485 | ||||||
Accumulated other comprehensive loss | (8,509) | (13,860) | ||||||
Deficit | (9,710,882) | (9,672,761) | ||||||
Total Canopy Growth Corporation shareholders' equity | 845,930 | 758,435 | ||||||
Noncontrolling interests | 1,575 | 1,587 | ||||||
Total shareholders' equity | 847,505 | 760,022 | ||||||
Total liabilities and shareholders' equity | $ | 2,190,534 | $ | 2,439,098 |
Schedule 2
CANOPY GROWTH CORPORATION | ||||||||
Three months ended June 30, | ||||||||
2023 | 2022 | |||||||
(As Restated) | ||||||||
Revenue | $ | 121,112 | $ | 118,667 | ||||
Excise taxes | 12,386 | 12,747 | ||||||
Net revenue | 108,726 | 105,920 | ||||||
Cost of goods sold | 102,789 | 111,506 | ||||||
Gross margin | 5,937 | (5,586) | ||||||
Operating expenses: | ||||||||
Selling, general and administrative expenses | 91,252 | 103,413 | ||||||
Share-based compensation | 3,865 | 5,439 | ||||||
Asset impairment and restructuring costs | 2,160 | 1,727,985 | ||||||
Total operating expenses | 97,277 | 1,836,837 | ||||||
Operating loss | (91,340) | (1,842,423) | ||||||
Other income (expense), net | 51,497 | (245,578) | ||||||
Loss before income taxes | (39,843) | (2,088,001) | ||||||
Income tax recovery | (2,018) | (3,749) | ||||||
Net loss | (41,861) | (2,091,750) | ||||||
Net loss attributable to noncontrolling interests and | (3,740) | (5,307) | ||||||
Net loss attributable to Canopy Growth Corporation | $ | (38,121) | $ | (2,086,443) | ||||
Basic and diluted loss per share | $ | (0.07) | $ | (5.24) | ||||
Basic and diluted weighted average common shares outstanding | 550,459,365 | 398,467,568 |
Schedule 3
CANOPY GROWTH CORPORATION CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of Canadian dollars, unaudited) | ||||||||
Three months ended June 30, | ||||||||
2023 | 2022 | |||||||
(As Restated) | ||||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (41,861) | $ | (2,091,750) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation of property, plant and equipment | 11,343 | 15,129 | ||||||
Amortization of intangible assets | 7,233 | 6,722 | ||||||
Share-based compensation | 3,865 | 5,439 | ||||||
Asset impairment and restructuring costs | 10,582 | 1,726,877 | ||||||
Income tax recovery | 2,018 | 3,749 | ||||||
Non-cash fair value adjustments and charges related to | (68,455) | 213,610 | ||||||
Change in operating assets and liabilities, net of effects from | ||||||||
Amounts receivable | (36,390) | 3,781 | ||||||
Inventory | 6,837 | (993) | ||||||
Prepaid expenses and other assets | 7,045 | (9,336) | ||||||
Accounts payable and accrued liabilities | (22,521) | (15,549) | ||||||
Other, including non-cash foreign currency | (28,367) | 1,806 | ||||||
Net cash used in operating activities | (148,671) | (140,515) | ||||||
Cash flows from investing activities: | ||||||||
Purchases of and deposits on property, plant and equipment | (2,008) | (2,293) | ||||||
Purchases of intangible assets | (304) | (606) | ||||||
Proceeds on sale of property, plant and equipment | 83,325 | - | ||||||
Redemption of short-term investments | 72,222 | 153,996 | ||||||
Net cash proceeds on sale of subsidiaries | - | (475) | ||||||
Investment in other financial assets | (472) | (29,205) | ||||||
Other investing activities | (10,189) | - | ||||||
Net cash provided by investing activities | 142,574 | 121,417 | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of stock options | - | 210 | ||||||
Repayment of long-term debt | (118,277) | (211) | ||||||
Other financing activities | (14,833) | (1,043) | ||||||
Net cash used in financing activities | (133,110) | (1,044) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (4,534) | 13,632 | ||||||
Net decrease in cash and cash equivalents | (143,741) | (6,510) | ||||||
Cash and cash equivalents, beginning of period | 677,007 | 776,005 | ||||||
Cash and cash equivalents, end of period | $ | 533,266 | $ | 769,495 |
Schedule 4
Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure) | ||||||||
Three months ended June 30, | ||||||||
(in thousands of Canadian dollars except where indicated; unaudited) | 2023 | 2022 | ||||||
(As Restated) | ||||||||
Net revenue | $ | 108,726 | $ | 105,920 | ||||
Gross margin, as reported | 5,937 | (5,586) | ||||||
Adjustments to gross margin: | ||||||||
Restructuring costs recorded in cost of goods sold | - | 3,961 | ||||||
Adjusted gross margin1 | $ | 5,937 | $ | (1,625) | ||||
Adjusted gross margin percentage1 | 5 | % | (2) | % | ||||
1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See "Non-GAAP Measures". |
Schedule 5
Adjusted EBITDA1 Reconciliation (Non-GAAP Measure) | ||||||||
Three months ended June 30, | ||||||||
(in thousands of Canadian dollars, unaudited) | 2023 | 2022 | ||||||
(As Restated) | ||||||||
Net loss | $ | (41,861) | $ | (2,091,750) | ||||
Income tax recovery | 2,018 | 3,749 | ||||||
Other (income) expense, net | (51,497) | 245,578 | ||||||
Share-based compensation | 3,865 | 5,439 | ||||||
Acquisition-related costs and other | 8,904 | 4,193 | ||||||
Depreciation and amortization2 | 18,576 | 21,851 | ||||||
Asset impairment and restructuring costs | 2,160 | 1,727,985 | ||||||
Restructuring costs recorded in cost of goods sold | - | 3,961 | ||||||
Adjusted EBITDA1 | $ | (57,835) | $ | (78,994) | ||||
1Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures". | ||||||||
2 From Consolidated Statements of Cash Flows. |
Schedule 6
Free Cash Flow1 Reconciliation (Non-GAAP Measure) | ||||||||
Three months June 30, | ||||||||
(in thousands of Canadian dollars, unaudited) | 2023 | 2022 | ||||||
Net cash used in operating activities | $ | (148,671) | $ | (140,515) | ||||
Purchases of and deposits on property, plant and equipment | (2,008) | (2,293) | ||||||
Free cash flow1 | $ | (150,679) | $ | (142,808) | ||||
1Free cash flow is a non-GAAP measure. See "Non-GAAP Measures". |
Schedule 7
Segmented Gross Margin and Segmented Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure)2 | ||||||||
Three months ended June 30, | ||||||||
(in thousands of Canadian dollars except where indicated; unaudited) | 2023 | 2022 | ||||||
(As Restated) | ||||||||
Net revenue | $ | 38,614 | $ | 52,415 | ||||
Gross margin, as reported | (495) | (12,534) | ||||||
Gross margin percentage, as reported | (1) | % | (24) | % | ||||
Adjusted gross margin1 | $ | (495) | $ | (12,534) | ||||
Adjusted gross margin percentage1 | (1) | % | (24) | % | ||||
Rest-of-world cannabis segment | ||||||||
Revenue | $ | 10,162 | $ | 13,781 | ||||
Gross margin, as reported | 3,481 | (160) | ||||||
Gross margin percentage, as reported | 34 | % | (1) | % | ||||
Adjustments to gross margin: | ||||||||
Restructuring costs recorded in cost of goods sold | - | 3,300 | ||||||
Adjusted gross margin1 | $ | 3,481 | $ | 3,140 | ||||
Adjusted gross margin percentage1 | 34 | % | 23 | % | ||||
Storz & Bickel segment | ||||||||
Revenue | $ | 18,073 | $ | 15,643 | ||||
Gross margin, as reported | 7,707 | 5,621 | ||||||
Gross margin percentage, as reported | 43 | % | 36 | % | ||||
Adjusted gross margin1 | $ | 7,707 | $ | 5,621 | ||||
Adjusted gross margin percentage1 | 43 | % | 36 | % | ||||
BioSteel segment | ||||||||
Revenue | $ | 32,468 | $ | 13,693 | ||||
Gross margin, as reported | (7,825) | (1,762) | ||||||
Gross margin percentage, as reported | (24) | % | (13) | % | ||||
Adjustments to gross margin: | ||||||||
Restructuring costs recorded in cost of goods sold | - | 661 | ||||||
Adjusted gross margin1 | $ | (7,825) | $ | (1,101) | ||||
Adjusted gross margin percentage1 | (24) | % | (8) | % | ||||
This Works segment | ||||||||
Revenue | $ | 6,017 | $ | 5,520 | ||||
Gross margin, as reported | 2,895 | 2,647 | ||||||
Gross margin percentage, as reported | 48 | % | 48 | % | ||||
Adjusted gross margin1 | $ | 2,895 | $ | 2,647 | ||||
Adjusted gross margin percentage1 | 48 | % | 48 | % | ||||
1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See "Non-GAAP Measures". | ||||||||
2 In Q1 FY24, we are reporting our financial results for the following five reportable segments: (i) |
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SOURCE Canopy Growth Corporation
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