Canopy Growth Reports Third Quarter Fiscal Year 2024 Financial Results; Achieves Third Quarter of Sequential Revenue Growth across Canada Cannabis Businesses and a Record Quarter for Medical Sales
- Consolidated gross margins reached 36% in Q3 FY2024, with Canada cannabis gross margins at 28%, a significant increase from the previous year.
- Excluding the impact of divestiture in Q3 FY2023, Q3 FY2024 consolidated net revenue grew by 6% year-over-year.
- Rest-of-World cannabis revenue in Q3 FY2024 increased by 81% year-over-year, driven by strong growth in Australia and Europe.
- Storz & Bickel® net revenue in Q3 FY2024 increased by 54% sequentially, with strong sales of the new Venty portable vaporizer.
- Free cash flow improved by 57% year-over-year in Q3 FY2024, with a cash balance of $186MM as of December 31, 2023.
- Canada adult-use cannabis B2B revenue grew by 9% year-over-year, while Canadian medical cannabis revenue increased by 11% in Q3 FY2024.
- Gross margins for Storz & Bickel® improved to 51% in Q3 FY2024, compared to 45% in Q3 FY2023.
- Operating loss decreased to $60MM in Q3 FY2024, from $113MM in Q3 FY2023.
- Adjusted EBITDA loss improved by 82% in Q3 FY2024 compared to the previous year.
- Canopy Growth reaffirms expectations to achieve positive Adjusted EBITDA in each business unit by the end of FY2024.
- None.
Insights
The reported increase in adult-use cannabis business-to-business net revenue and medical cannabis net revenue in Canada indicates a positive trajectory for Canopy Growth Corporation's market share and financial health. The 9% and 11% year-over-year revenue growth align with the burgeoning demand for cannabis products in a maturing market. The sustained margin improvement, with gross margins exceeding 30%, reflects effective cost management and operational efficiency, a critical factor for profitability in the competitive cannabis industry.
The reduction in free cash flow burn by 57% year-over-year suggests a strategic shift towards financial stability. This is a crucial metric for investors, as it demonstrates a company's ability to generate cash and fund operations without external financing. The reaffirmation of achieving positive Adjusted EBITDA in each business unit by the end of FY2024 could be a pivotal milestone for Canopy Growth, potentially leading to sustained investor confidence.
Canopy Growth's strategic focus on the U.S. market, as indicated by the Canopy USA strategy, is noteworthy given the size and growth potential of the U.S. cannabis industry. The anticipation of becoming the first U.S. listed company offering direct cannabis market exposure could attract a broader investor base. However, the regulatory landscape in the U.S. remains fragmented and uncertain, which could pose risks to the company's expansion plans.
The successful launch of the VENTY portable vaporizer and the strong performance during Black Friday sales highlight the brand's innovation and consumer appeal. The company's ability to capture consumer trends with new product offerings, such as the Wana® brand edibles and the VENTY vaporizer, is indicative of its market agility and could drive future revenue growth.
The planned special shareholder meeting and the forward movement of the Canopy USA strategy underscore the company's commitment to navigating complex legal frameworks to capitalize on market opportunities. While the company's strategic initiatives are promising, they must be viewed within the context of the evolving legal environment surrounding cannabis, especially in the U.S. The outcome of the shareholder meeting and subsequent regulatory developments will be significant in determining the company's ability to execute its strategy effectively.
Investors should be cognizant of the legal risks associated with the cannabis industry, as changes in legislation can have profound impacts on market dynamics and company operations. Canopy Growth's proactive approach to regulatory compliance and its strategic positioning in anticipation of U.S. federal legalization could be advantageous, but it is not without legal and regulatory hurdles.
Focused execution drove sustained margin improvement with second quarter of consolidated gross margins exceeding
Canopy
- Achieved consolidated gross margins of
36% in Q3 FY2024, withCanada cannabis gross margins increasing to28% in Q3 FY2024, up from (11)% in Q3 FY2023. - Excluding the impact of the divestiture of the
Canada national retail business in Q3 FY2023, Q3 FY2024 consolidated net revenue grew by6% year-over-year. Delivered Q3 FY2024 consolidated net revenue of$79M M representing a decline of7% year-over-year. - Rest-of-World cannabis revenue in Q3 FY2024 increased
81% year-over-year, led by continued strong growth inAustralia , return to growth inEurope driven by new products and improved sales execution, and lapping negative revenue impacts in non-core markets during the prior year. - Storz & Bickel® net revenue in Q3 FY2024 increased
54% sequentially driven by strong sales of the new VENTY portable vaporizer, traditionally strong seasonal sales, including the most successful Black Friday sales event in the brand's 20-year history. - Free cash flow from continuing operations of
$(34)M M in Q3 FY2024, representing a57% improvement year-over-year. - Cash and short-term investments balance of
$186M M as at December 31, 2023. Reduced overall debt by$69M M during Q3 FY2024. - Management reaffirms expectation to achieve positive Adjusted EBITDA in each business unit exiting FY2024.
"This is the dawn of a new era at Canopy Growth. We're singularly focused on cannabis and demonstrating growth across all of our business units. With our Canopy
David Klein, Chief Executive Officer
"Our Q3 FY2024 results demonstrate the substantial improvement in profitability and reduction in cash burn compared to the previous year as well as Q2 FY2024. Our right-sized business is consistently delivering profitability improvements as well as sequential growth. These results, paired with our ongoing actions to strengthen Canopy Growth's balance sheet, reinforce our confidence in continued performance along this path for a sustainable, profitable future."
Judy Hong, Chief Financial Officer
(in millions of Canadian | Net Revenue | Gross margin | Adjusted | Net loss from | Adjusted | Free cash | |
Reported | 36 % | 36 % | |||||
vs. Q3 FY2023 | (7 %) | 3,000 bps | 2,700 bps | (2 %) | 82 % | 57 % |
Canada adult-use cannabis business-to-business revenue increased9% year-over-year to$23M M in Q3 FY2024 driven by growth in the large format products of Tweed flower as well as the addition of the Wana® brand edibles to the portfolio.- Canadian medical cannabis generated record net revenue in Q3 FY2024, with revenue increasing
11% compared to the prior year primarily attributable to an increase in the average size of medical orders placed by our customers. Canadian medical cannabis revenue increase was due largely to a shift in our customer mix and a larger assortment of cannabis product choices offered to our customers. Canada cannabis segment gross margins improved to28% in Q3 FY2024, compared to (11)% in Q3 FY2023, driven by lower excess and obsolete inventory charges, lower operating costs resulting from the cost reduction actions taken to date, and the opportunistic use of lower cost inputs.- Despite a decrease in revenues compared to Q3 FY2023, Storz & Bickel® net revenue in Q3 FY2024 increased
54% sequentially driven by strong sales of the new VENTY portable vaporizer, traditionally strong seasonal sales, including the brand's most successful Black Friday sales event to date. Gross margins improved to51% in Q3 FY2024, compared to45% in Q3 FY2023, driven primarily by lower input costs and a positive shift in product mix to higher-margin newly launched products. - Selling, general and administrative expenses were
$54M M in Q3 FY2024, down from$90M M in Q3 FY2023. - Operating loss from continuing operations of
$60M M in Q3 FY2024, compared to a loss of$113M M in Q3 FY2023. Adjusted EBITDA loss was$9M M in Q3 FY2024, representing an improvement of82% compared to the$50M M Adjusted EBTIDA loss in Q3 FY2023, the narrowest loss since FY2017, driven primarily by lower operating costs resulting from the cost reduction actions taken to date.
Demand for quality products driving profitable growth of
- The Company held its ranking of top 3 supplier of cannabis flower4 in
British Columbia and added over 900 points of distribution nationally for flower in Q3 FY2024. - The Company's re-introduction of Wana® brand cannabis edibles in Q3 FY2024 has re-established robust distribution nationally and returned distribution to growth in
Ontario driven by key accounts. Wana® brand cannabis gummies delivered top 3 and 4 market share inBritish Columbia andOntario , respectively.
Strong demand for proven flower strains is driving growth in our Rest-of-World medical cannabis business
- Canopy Growth's Australian medical cannabis business has generated 12 straight quarters of revenue growth.
- Shipments of proven Canadian strains Kush Mints, Tiger Cake and OG Delux, and increased engagements with medical practitioners contributed to growth in the Australian and German medical cannabis markets in Q3 FY2024.
Strong demand for new Storz & Bickel® Venty portable vaporizer helped drive strong sequential revenue growth
- Demand for the new Venty vaporizer, a device priced at the top of the range for comparable portable devices, has exceeded expectations, and a second production shift was added to help meet demand. In the critical holiday sales window of December 2023, the Venty vaporizer was Storz & Bickel®'s best-selling device, selling approximately double the number of the next highest selling device.
- The Venty vaporizer has been positively reviewed by leading vape and vaporizer-related publications and influencers.5
- Black Friday sales were the most successful in Storz & Bickel®'s over 20-year history with device sales increasing
55% over the number of devices sold during the prior year's Black Friday event.
Advancing Canopy
- The Company expects to file its definitive proxy statement with the
U.S. Securities and Exchange Commission ("SEC") on or about February 13, 20 24 and to host a special meeting (the "Special Meeting") of the Company's shareholders (the "Shareholders") on April 12, 2024. At the Special Meeting, Shareholders will be asked to consider a special resolution authorizing an amendment to its articles of incorporation to, among other things, create a new class of non-voting, non-participating exchangeable shares in the capital of the Company (the "Exchangeable Shares"). - Upon creation of the Exchangeable Shares, and Canopy
USA 's acquisition ofU.S. THC businesses, the Company's investors are expected to have an opportunity to participate in theU.S. cannabis market through Canopy Growth's non-controlling interest in Canopy USA.
Revenue by Channel
(in millions of Canadian dollars, unaudited) | Q3 FY2024 | Q3 FY2023 | Vs. Q3 FY2023 | |
Canadian adult-use cannabis | ||||
Business-to-business7 | 9 % | |||
Business-to-consumer | $- | (100 %) | ||
(28 %) | ||||
Canadian medical cannabis8 | 11 % | |||
(16 %) | ||||
Rest-of-world cannabis9 | 81 % | |||
Storz & Bickel | (8 %) | |||
This Works | (1 %) | |||
Other | (41 %) | |||
Net revenue | (7 %) |
The Q3 FY2024 and Q3 FY2023 financial results presented in this press release have been prepared in accordance with
____________________ |
1 Adjusted gross margin is a non-GAAP measure, and for Q3 FY2024 excludes $nil of restructuring cost recorded in cost of goods sold (Q3 FY2023 - excludes |
2 Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures" and Schedule 5 for a reconciliation of net loss to Adjusted EBITDA. |
3 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. |
4 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 |
5 i) https://vapeguy.com/reviews/venty-review/; ii) https://www.gearpatrol.com/home/a45999382/storz-and-bickel-venty-review/; iii) https://www.vaporizerwizard.com/reviews/vaporizers/portable/venty/; iv) https://www.planetofthevapes.com/blogs/blog/venty-vaporizer-review |
6 In Q3 FY2024, we are reporting our financial results for the following four reportable segments: (i) |
7 For Q3 FY2024, amount is net of excise taxes of |
8 For Q3 FY2024, amount is net of excise taxes of |
9 For Q3 FY2024, amount reflects other revenue adjustments of |
The Company also announced that Robert L. Hanson has resigned from Canopy Growth's Board of Directors (the "Board"), effective as of February 6, 2024. As part of the advancement of Canopy
Willy Kruh – Director, Member of the Audit Committee
Willy J. Kruh CPA, CA, MBA, is a retired Partner and Global (and Canadian) Chairman of Consumer and Retail at KPMG LLP, with over 35 years of experience. As a recognized and trusted, advisor, consultant, and auditor, Willy has been instrumental in shaping the financial landscape of leading consumer packaged goods ("CPG"), retail, food, and beverage, multinational corporations, offering strategic guidance and invaluable insights to industry leaders in
Luc Mongeau – Director, Member of the Corporate Governance, Compensation & Nominating Committee
Luc Mongeau is a seasoned executive with over 25 years of experience spearheading multi-billion-dollar CPG companies throughout
The Company will host a conference call and audio webcast with David Klein, CEO and Judy Hong, CFO at 10:00 AM Eastern Time on February 9, 2024.
Webcast Information
A live audio webcast will be available at https://app.webinar.net/GZqr9ALP1XV
Replay Information
A replay will be accessible by webcast until 11:59 PM Eastern Time on May 9, 2024 at https://app.webinar.net/GZqr9ALP1XV
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
Canopy Growth is a leading North American cannabis and 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 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, websites 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.
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:
- expectations regarding the Canopy
USA THC platform, the anticipated timing of filing the Company's definitive proxy statement and the anticipated timing, occurrence and outcome of the Company's shareholder meeting to pass a special resolution authorizing, among other things, the creation of the Exchangeable Shares; - the Company's ability to achieve positive Adjusted EBITDA across its business units exiting FY2024;
- an investor's ability to participate in the
U.S. cannabis market through Canopy Growth's unconsolidated investment in CanopyUSA ; - 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 cannabidiol ("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 CanopyUSA ; - expectations regarding the Company's ability to deconsolidate the financial results of Canopy
USA from the financial results of Canopy Growth upon CanopyUSA 's acquisition of Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC, , Lemurian, Inc., or the Fixed Shares (as defined below) of Acreage; - expectations regarding the potential success of, and the costs and benefits associated with certain changes to the initial structure of the Company's interest in Canopy
USA that were intended to facilitate the deconsolidation of the financial results of CanopyUSA within Canopy Growth's financial statements; - expectations related to the Company's announcement of certain restructuring actions and 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 Transformative 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 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 Canopy
USA on October 24, 2022, as amended (the "Floating Share Arrangement Agreement)", the anticipated benefits of such arrangement (the "Floating Share 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 CanopyUSA , 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 (the "Acreage Amended Agreement"), 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 amended and restated plan of arrangement (the "Acreage Amended Arrangement") dated September 23, 2020 with respect to the acquisition of the Fixed Shares and the Floating Share Arrangement, including the occurrence or waiver (at our discretion) of changes in
U.S. federal law to permit the general cultivation, distribution, and possession of marijuana or to remove the regulation of such activities from the federal laws ofthe United States , the anticipated timing and occurrence of the Company's exercise of the option to acquire Fixed Shares and the satisfaction or waiver of the conditions to closing the acquisition of Acreage; - expectations regarding the option premium payment made by the Company in the amount of
US MM (the "Option Premium") in connection with the Company's acquisition of an option to acquire the outstanding principal, including all accrued and unpaid interest thereon, of Acreage's debt from Acreage's existing lenders, including the ability to, and timing of, the exercise of such option;$28.5 - the potential conversion of common shares of the Company held by the CBI Group (as defined below) to Exchangeable Shares, including the termination of the Second Amended and Restated Investor Rights Agreement dated April 18, 2019 between certain wholly owned subsidiaries of Constellation Brands, Inc. ("CBI") and Canopy Growth;
- 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 Canopy Growth by CBI and its affiliates (collectively, the "CBI Group");
- the pre-emptive rights and/or top-up rights held by the CBI Group;
- expectations regarding the use of proceeds of equity financings;
- 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 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, without limitation: (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 selling, general and administrative ("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 further write down intangible assets, including goodwill, due to impairment; the diversion of management time on issues related to Canopy
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.
Participants in the Solicitation
Canopy Growth and its directors and executive officers may be deemed participants in the solicitation of proxies from Shareholders with respect to the solicitation of votes to consider a special resolution authorizing an amendment to its articles of incorporation to, among other things, create the Exchangeable Shares. A description of the interests of our directors and executive officers in the Amendment Proposal is contained in Canopy Growth's revised preliminary proxy statement filed with SEC on February 5, 2024 (the "Preliminary Proxy Statement") and is available free of charge at the SEC's website at www.sec.gov, or by directing a request to Canopy Growth Corporation, 1 Hershey Drive,
CANOPY GROWTH CORPORATION | ||||||||
December 31, | March 31, | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 142,745 | $ | 667,693 | ||||
Short-term investments | 43,436 | 105,526 | ||||||
Restricted short-term investments | 7,275 | 11,765 | ||||||
Amounts receivable, net | 63,924 | 68,459 | ||||||
Inventory | 86,917 | 83,230 | ||||||
Assets of discontinued operations | 29,401 | 116,291 | ||||||
Prepaid expenses and other assets | 23,582 | 24,290 | ||||||
Total current assets | 397,280 | 1,077,254 | ||||||
Other financial assets | 392,324 | 568,292 | ||||||
Property, plant and equipment | 340,479 | 471,271 | ||||||
Intangible assets | 119,072 | 160,750 | ||||||
Goodwill | 85,237 | 85,563 | ||||||
Noncurrent assets of discontinued operations | - | 56,569 | ||||||
Other assets | 25,359 | 19,996 | ||||||
Total assets | $ | 1,359,751 | $ | 2,439,695 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 25,837 | $ | 31,835 | ||||
Other accrued expenses and liabilities | 49,775 | 53,743 | ||||||
Current portion of long-term debt and convertible debentures | 91,336 | 556,890 | ||||||
Liabilities of discontinued operations | - | 67,624 | ||||||
Other liabilities | 54,397 | 93,750 | ||||||
Total current liabilities | 221,345 | 803,842 | ||||||
Long-term debt | 520,738 | 749,991 | ||||||
Noncurrent liabilities of discontinued operations | - | 3,417 | ||||||
Other liabilities | 73,005 | 122,423 | ||||||
Total liabilities | 815,088 | 1,679,673 | ||||||
Commitments and contingencies | ||||||||
Canopy Growth Corporation shareholders' equity: | ||||||||
Common shares - $nil par value; Authorized - unlimited number of shares; | 8,219,747 | 7,938,571 | ||||||
Additional paid-in capital | 2,578,519 | 2,506,485 | ||||||
Accumulated other comprehensive loss | (16,049) | (13,860) | ||||||
Deficit | (10,237,693) | (9,672,761) | ||||||
Total Canopy Growth Corporation shareholders' equity | 544,524 | 758,435 | ||||||
Noncontrolling interests | 139 | 1,587 | ||||||
Total shareholders' equity | 544,663 | 760,022 | ||||||
Total liabilities and shareholders' equity | $ | 1,359,751 | $ | 2,439,695 | ||||
1 Prior year share amounts have been retrospectively adjusted to reflect the Share Consolidation (as defined in the Q3 FY2024 Form 10-Q), which became effective on December 15, 2023. |
CANOPY GROWTH CORPORATION | ||||||||
Three months ended December 31, | ||||||||
2023 | 2022 | |||||||
(As Restated) | ||||||||
Revenue | $ | 90,061 | $ | 96,986 | ||||
Excise taxes | 11,556 | 12,136 | ||||||
Net revenue | 78,505 | 84,850 | ||||||
Cost of goods sold | 50,279 | 79,622 | ||||||
Gross margin | 28,226 | 5,228 | ||||||
Operating expenses | ||||||||
Selling, general and administrative expenses | 54,436 | 89,604 | ||||||
Share-based compensation | 3,693 | 6,055 | ||||||
Loss on asset impairment and restructuring | 30,413 | 22,259 | ||||||
Total operating expenses | 88,542 | 117,918 | ||||||
Operating loss from continuing operations | (60,316) | (112,690) | ||||||
Other income (expense), net | (171,037) | (115,490) | ||||||
Loss from continuing operations before income taxes | (231,353) | (228,180) | ||||||
Income tax recovery (expense) | 1,077 | 1,336 | ||||||
Net loss from continuing operations | (230,276) | (226,844) | ||||||
Discontinued operations, net of income tax | 13,479 | (37,532) | ||||||
Net loss | (216,797) | (264,376) | ||||||
Net loss from continuing operations attributable to | - | (542) | ||||||
Discontinued operations attributable to noncontrolling | - | (4,369) | ||||||
Net loss attributable to Canopy Growth Corporation | $ | (216,797) | $ | (259,465) | ||||
Basic and diluted loss per share1 | ||||||||
Continuing operations | $ | (2.78) | $ | (4.66) | ||||
Discontinued operations | 0.16 | (0.68) | ||||||
Basic and diluted loss per share | $ | (2.62) | $ | (5.34) | ||||
Basic and diluted weighted average common shares | 82,919,190 | 48,611,260 | ||||||
1 Prior year share and per share amounts have been retrospectively adjusted to reflect the Share Consolidation, which became effective on December 15, 2023. |
CANOPY GROWTH CORPORATION | ||||||||
Nine months ended December 31, | ||||||||
2023 | 2022 | |||||||
(As Restated) | ||||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (583,458) | $ | (2,661,937) | ||||
Loss from discontinued operations, net of income tax | (194,451) | (169,492) | ||||||
Net loss from continuing operations | (389,007) | (2,492,445) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation of property, plant and equipment | 22,485 | 42,674 | ||||||
Amortization of intangible assets | 19,396 | 18,058 | ||||||
Share-based compensation | 10,127 | 20,893 | ||||||
(Gain) loss on asset impairment and restructuring | (816) | 1,797,854 | ||||||
Income tax expense | 13,762 | 10,633 | ||||||
Non-cash fair value adjustments and charges related to | 188,452 | 325,742 | ||||||
Change in operating assets and liabilities, net of effects from | ||||||||
Amounts receivable | (14,460) | 13,143 | ||||||
Inventory | (8,047) | (92) | ||||||
Prepaid expenses and other assets | (843) | (2,665) | ||||||
Accounts payable and accrued liabilities | 891 | (19,084) | ||||||
Other, including non-cash foreign currency | (47,901) | (13,501) | ||||||
Net cash used in operating activities - continuing operations | (205,961) | (298,790) | ||||||
Net cash used in operating activities - discontinued operations | (53,930) | (119,019) | ||||||
Net cash used in operating activities | (259,891) | (417,809) | ||||||
Cash flows from investing activities: | ||||||||
Purchases of and deposits on property, plant and equipment | (3,200) | (6,176) | ||||||
Purchases of intangible assets | (716) | (1,265) | ||||||
Proceeds on sale of property, plant and equipment | 153,753 | 10,894 | ||||||
Redemption of short-term investments | 68,294 | 415,322 | ||||||
Net cash (outflow) proceeds on sale of subsidiaries | (3,719) | 12,432 | ||||||
Investment in other financial assets | (472) | (67,186) | ||||||
Other investing activities | (9,234) | 2,051 | ||||||
Net cash provided by investing activities - operating activities | 204,706 | 366,072 | ||||||
Net cash used in investing activities - discontinued operations | (2,600) | (23,947) | ||||||
Net cash provided by investing activities | 202,106 | 342,125 | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common shares and warrants | 33,795 | 856 | ||||||
Proceeds from exercise of stock options | - | 270 | ||||||
Repayment of long-term debt | (480,080) | (117,951) | ||||||
Other financing activities | (27,239) | (29,096) | ||||||
Net cash used in financing activities | (473,524) | (145,921) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (2,953) | 43,731 | ||||||
Net decrease in cash and cash equivalents | (534,262) | (177,874) | ||||||
Cash and cash equivalents, beginning of period1 | 677,007 | 776,005 | ||||||
Cash and cash equivalents, end of period2 | $ | 142,745 | $ | 598,131 | ||||
1 Includes cash of our discontinued operations of |
2 Includes cash of our discontinued operations of $nil and |
Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure) | ||||||||
Three months ended December 31, | ||||||||
(in thousands of Canadian dollars except where indicated; unaudited) | 2023 | 2022 | ||||||
Net revenue | $ | 78,505 | $ | 84,850 | ||||
Gross margin, as reported | 28,226 | 5,228 | ||||||
Adjustments to gross margin: | ||||||||
Restructuring costs recorded in cost of goods sold | - | 2,007 | ||||||
Adjusted gross margin1 | $ | 28,226 | $ | 7,235 | ||||
Adjusted gross margin percentage1 | 36 | % | 9 | % | ||||
1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See "Non-GAAP Measures". | ||||||||
Adjusted EBITDA1 Reconciliation (Non-GAAP Measure) | ||||||||
Three months ended December 31, | ||||||||
(in thousands of Canadian dollars, unaudited) | 2023 | 2022 | ||||||
Net loss from continuing operations | $ | (230,276) | $ | (226,844) | ||||
Income tax recovery | (1,077) | (1,336) | ||||||
Other (income) expense, net | 171,037 | 115,490 | ||||||
Share-based compensation | 3,693 | 6,055 | ||||||
Acquisition, divestiture, and other costs | 4,981 | 13,347 | ||||||
Depreciation and amortization2 | 12,240 | 19,308 | ||||||
Loss on asset impairment and restructuring | 30,413 | 22,259 | ||||||
Restructuring costs recorded in cost of goods sold | - | 2,007 | ||||||
Adjusted EBITDA1 | $ | (8,989) | $ | (49,714) | ||||
1Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures". | ||||||||
2 From Consolidated Statements of Cash Flows. | ||||||||
Free Cash Flow1 Reconciliation (Non-GAAP Measure) | ||||||||
Three months December 31, | ||||||||
(in thousands of Canadian dollars, unaudited) | 2023 | 2022 | ||||||
Net cash used in operating activities - continuing | $ | (33,348) | $ | (77,055) | ||||
Purchases of and deposits on property, | (564) | (1,868) | ||||||
Free cash flow1 - continuing operations | $ | (33,912) | $ | (78,923) | ||||
1Free cash flow is a non-GAAP measure. See "Non-GAAP Measures". | ||||||||
Segmented Gross Margin and Segmented Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure) | ||||||||
Three months ended December 31, | ||||||||
(in thousands of Canadian dollars except where indicated; unaudited) | 2023 | 2022 | ||||||
Net revenue | $ | 39,028 | $ | 46,617 | ||||
Gross margin, as reported | 11,113 | (5,281) | ||||||
Gross margin percentage, as reported | 28 | % | (11) | % | ||||
Adjustments to gross margin: | ||||||||
Restructuring costs recorded in cost of goods sold | - | 1,689 | ||||||
Adjusted gross margin1 | $ | 11,113 | $ | (3,592) | ||||
Adjusted gross margin percentage1 | 28 | % | (8) | % | ||||
Rest-of-world cannabis segment | ||||||||
Revenue | $ | 10,527 | $ | 5,846 | ||||
Gross margin, as reported | 4,192 | (2,184) | ||||||
Gross margin percentage, as reported | 40 | % | (37) | % | ||||
Adjustments to gross margin: | ||||||||
Restructuring costs recorded in cost of goods sold | - | 256 | ||||||
Adjusted gross margin1 | $ | 4,192 | $ | (1,928) | ||||
Adjusted gross margin percentage1 | 40 | % | (33) | % | ||||
Storz & Bickel segment | ||||||||
Revenue | $ | 18,453 | $ | 20,214 | ||||
Gross margin, as reported | 9,449 | 9,186 | ||||||
Gross margin percentage, as reported | 51 | % | 45 | % | ||||
Adjusted gross margin1 | $ | 9,449 | $ | 9,186 | ||||
Adjusted gross margin percentage1 | 51 | % | 45 | % | ||||
This Works segment | ||||||||
Revenue | $ | 8,165 | $ | 8,289 | ||||
Gross margin, as reported | 4,253 | 4,032 | ||||||
Gross margin percentage, as reported | 52 | % | 49 | % | ||||
Adjustments to gross margin: | ||||||||
Restructuring costs recorded in cost of goods sold | - | 62 | ||||||
Adjusted gross margin1 | $ | 4,253 | $ | 4,094 | ||||
Adjusted gross margin percentage1 | 52 | % | 49 | % | ||||
Other | ||||||||
Revenue | $ | 2,332 | $ | 3,884 | ||||
Gross margin, as reported | (781) | (525) | ||||||
Gross margin percentage, as reported | (33) | % | (14) | % | ||||
Adjusted gross margin1 | $ | (781) | $ | (525) | ||||
Adjusted gross margin percentage1 | (33) | % | (14) | % | ||||
1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See "Non-GAAP Measures". | ||||||||
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SOURCE Canopy Growth Corporation
FAQ
What was the percentage increase in Canada adult-use cannabis B2B net revenue for Canopy Growth in Q3 FY2024?
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