Canopy Growth Reports First Quarter Fiscal 2022 Financial Results
Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (NASDAQ: CGC) today announces its financial results for the first quarter fiscal 2022 ended June 30, 2021. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.
CANOPY GROWTH REPORTS FIRST QUARTER FISCAL 2022 FINANCIAL RESULTS (CNW Group/Canopy Growth Corporation)
CANOPY GROWTH REPORTS FIRST QUARTER FISCAL 2022 FINANCIAL RESULTS (CNW Group/Canopy Growth Corporation)
Highlights
Achieved 23% revenue growth in Q1 2022 versus Q1 2021 driven by strong double-digit growth in both cannabis and other consumer products businesses.
Maintained #1 market share1 in tracked Canadian recreational cannabis market amid a highly competitive landscape.
Completed acquisition of Ace Valley and Supreme Cannabis, with commercial and operational Integration progressing smoothly.
Led by consumer insights, a robust innovation pipeline with over 100+ SKUs across key product categories set to hit store shelves from Q2 2022 to Q4 2022.
Momentum with cannabis reform increasing as the Company continues to build its U.S. presence through broad portfolio of innovative CBD and CPG brands.
Remains committed to accelerating top-line growth in the second half of fiscal 2022 and achieving positive Adjusted EBITDA by end of fiscal 2022.
“With the right strategy and strong foundation in place we are confident in our ability to deliver long-term success as Canopy’s products and brands continue to demonstrate their appeal to consumers in our core markets,” said David Klein, CEO, Canopy Growth. “While we’re encouraged by regulatory advancement in the U.S., Canopy is not waiting as we continue to scale our business on both sides of the border with an exciting product pipeline planned for the coming quarters.”
“We’re continuing to drive cost savings and operational efficiencies across the company, and remain broadly on track to our target of $150-$200 million in fiscal 2022- fiscal 2023,” added Mike Lee, CFO. “We look forward to scaling our new operating model in coming months as we push forward our profitability goals in fiscal year 2022.”
First Quarter Fiscal 2022 Financial Summary
(in millions of Canadian
\dollars, unaudited)
Net revenue
Gross margin
percentage
Adjusted
gross margin
percentage2
Net income
(loss)
Adjusted
EBITDA3
Free cash
flow4
Reported
$136.2
20%
21%
$390.0
$(63.6)
$(186.1)
vs. Q1 2021
23%
1,400 bps
1,400 bps
404%
31%
(3%)
________________________
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 a third-party data provider, government agencies and our own retail store operations across the country. The tool captures point of sale data from an average of 30% of stores in Alberta, British Columbia, Saskatchewan, Manitoba and Newfoundland & Labrador, point of sale data from 100% of stores in New Brunswick, Nova Scotia and Prince Edward Island, as well as depletions and e-commerce sales data from the OCS.
2 Adjusted gross margin is a non-GAAP measure, and for Q1 2022 excludes $1.4 million related to the flow-through of inventory step-up associated with the acquisition of Supreme Cannabis (Q1 2021 – excludes $1.2 million related to the flow-through of inventory step-up associated with fiscal 2020 business combinations). See “Non-GAAP Measures”.
3 Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures”.
4 Free cash flow is a non-GAAP measure. See “Non-GAAP Measures”.
Revenues: Net revenue of $136 million in Q1 2022 was an increase of 23% versus Q1 2021 driven by strong double-digit growth across Canadian cannabis and other consumer products, partially offset by a decline in international cannabis. Total net cannabis revenue of $93 million in Q1 2022, represented an increase of 17% over Q1 2021. Total other consumer products revenue in Q1 2022 increased 39% year-over year to $43 million. Excluding the impact from acquired businesses, net revenue increased 19% versus Q1 2021.
Gross margin: Reported gross margin in Q1 2022 was 20% as compared to 6% in Q1 2021. Gross margin in Q1 2021 was negatively impacted by lower production output and unfavorable pack size and geographic mix in the Canadian recreational business as well as start up costs in the U.S. including building inventory and activating new production capacity along with higher third-party shipping, distribution and warehousing costs, partially offset by payroll subsidies received from the Canadian government in Q1 2022, pursuant to a COVID-19 relief program. Adjusted gross margin, excluding charges related to the flow-through of inventory step-up on business combinations, was 21% compared to 7% in Q1 2021.
Operating expenses: Total SG&A (“SG&A”) expenses in Q1 2022 declined by 17% versus Q1 2021, driven by year-over-year reductions in General & Administrative (“G&A”) and Research and Development (“R&D”) expenses partially offset by an increase in Sales & Marketing (“S&M”) expenses. G&A expenses declined 48% year-over-year primarily due to reductions in staffing and professional fees and benefit from payroll subsidies received from the Canadian government in Q1 2022, pursuant to a COVID-19 relief program. R&D expenses declined 39% year-over-year principally due to product timing and lower finished product development expenses. S&M expenses increased 34% year-over-year due largely to a return to more normal advertising and promotional spending in the first quarter of fiscal 2022; in the first quarter of fiscal 2021, the Company delayed or cancelled various product and brand marketing initiatives due to the measures established to contain the spread of COVID-19.
Net Earnings: Net Earnings in Q1 2022 of $390 million, which is a $518 million improvement versus Q1 2021, was driven primarily by Other Income totalling $581 million during Q1 2022 primarily attributable to non-cash fair value changes of $601 million.
Adjusted EBITDA: Adjusted EBITDA loss in Q1 2022 was $64 million, a $29 million narrower loss versus Q1 2021 driven by higher sales and lower operating expenses. Adjusted EBITDA loss in Q1 2022 was negatively impacted by a $10.1 million impairment charge related to the changes in our sourcing strategy for certain products.
Free Cash Flow: Free Cash Flow in Q1 2022 was an outflow of $186 MM, a 3% greater outflow vs Q1 2021. Relative to Q4 2021, Free Cash Flow during the quarter was negatively impacted by the timing of certain one-time payments totalling $19 million, incremental interest payment associated with the US$750 million debt financing that occurred in Q4 2021 as well as the impact of inventory build for BioSteel’s Ready-To-Drink (“RTD”) products in the U.S.
Cash Position: Cash and Short-term Investments amounted to $2.1 billion at June 30, 2021, representing a decrease of $0.2 billion from $2.3 billion at March 31, 2021 reflecting EBITDA losses and capital investments.
First Quarter Fiscal 2022 Business & Operational Highlights
Achieved another quarter of strong double-digit revenue growth year-over-year
Led by consumer insights, already launched 50+ SKUs over past two quarters, 100+ SKUs expected to enter markets in coming quarters
Remain focused on further capitalizing on the U.S. market
Achieving profitability and improving cashflow remain the Company’s top priority
First Quarter Fiscal 2022 Revenue Review
Revenue by Channel
(in millions of Canadian dollars, unaudited)
Q1 2022
Q1 2021
vs. Q1 2021
Canadian recreational cannabis
– Business to business5
$42.7
$34.9
22%
– Business to consumer
$17.3
$9.4
84%
$60.0
$44.3
35%
Canadian medical cannabis6
$13.5
$13.9
(3%)
$73.5
$58.2
26%
International and other
– C3
$11.4
$15.4
(26%)
– Other
$8.0
$5.7
40%
$19.4
$21.1
(8%)
Global cannabis net revenue
$92.9
$79.3
17%
Other consumer products
– Storz & Bickel
$24.1
$17.1
41%
– This Works
$6.5
$6.1
7%
– BioSteel
$6.7
$2.4
179%
– Other
$6.0
$5.5
9%
Other consumer products revenue
$43.3
$31.1
39%
Net revenue
$136.2
$110.4
23%
This table has been recast to align with our new segment reporting. International and other revenue includes revenue from our international medical business and hemp-derived CBD business. Other consumer products includes revenue from Storz & Bickel, This Works, BioSteel, clinics, accessories and other ancillary businesses.
________________________________
5 Reflects excise taxes of $17.8 million and other revenue adjustments of $3.0 million for Q1 2022 (Q1 2021 – $7.2 million and $3.4 million, respectively).
6 Reflects excise taxes of $1.4 million for Q1 2022 (Q1 2021 – $1.4 million).
Revenue by Form
(in millions of Canadian dollars, unaudited)
Q1 2022
Q1 2021
vs. Q1 2021
Canadian recreational cannabis
– Dry bud7
$66.0
$40.1
65%
– Oils and softgels7
$5.7
$7.7
(26%)
– Beverages, edibles, topicals7
and vapes
$9.1
$7.1
28%
– Other revenue adjustments8
$(3.0)
$(3.4)
12%
– Excise taxes
$(17.8)
$(7.2)
(147%)
$60.0
$44.3
35%
Medical cannabis and other
– Dry bud
$9.6
$10.8
(11%)
– Oils and softgels
$20.5
$25.2
(19%)
– Beverages, edibles, topicals
and vapes
$4.2
$0.4
950%
– Excise taxes
$(1.4)
$(1.4)
0%
$32.9
$35.0
(6%)
Global cannabis net revenue
$92.9
$79.3
17%
Other consumer products
– Storz & Bickel
$24.1
$17.1
41%
– This Works
$6.5
$6.1
7%
– BioSteel
$6.7
$2.4
179%
– Other
$6.0
$5.5
9%
Other consumer products revenue
$43.3
$31.1
39%
Net revenue
$136.2
$110.4
23%
This table has been recast to align with our new segment reporting.
Canadian Cannabis
International Cannabis
_____________________________
7 Excludes the impact of other revenue adjustments.
8 Other revenue adjustments represent the Company’s determination of returns and pricing adjustments, and relate to the Canadian recreational business-to-business channel.
Other Consumer Products
The first quarter fiscal 2022 and first quarter fiscal 2021 financial results presented in this press release have been prepared in accordance with U.S. GAAP.
Webcast and Conference Call Information
The Company will host a conference call and audio webcast with David Klein, CEO and Mike Lee, CFO at 10:00 AM Eastern Time on August 6, 2021.
Webcast Information
A live audio webcast will be available at:
https://produceredition.webcasts.com/starthere.jsp?ei=1479656&tp_key=7a3d0094a3
Replay Information
A replay will be accessible by webcast until 11:59 PM ET on November 4, 2021 at:
https://produceredition.webcasts.com/starthere.jsp?ei=1479656&tp_key=7a3d0094a3
Non-GAAP Measures
Adjusted EBITDA is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted EBITDA is calculated as the reported net income (loss), adjusted to exclude income tax recovery (expense); other income (expense), net; loss on equity method investments; share-based compensation expense; depreciation and amortization expense; asset impairment and restructuring costs; restructuring costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition-related costs. Asset impairments related to periodic changes to the Company’s supply chain processes are not excluded from Adjusted EBITDA given their occurrence through the normal course of core operational activities. The Adjusted EBITDA reconciliation is presented within this news release and explained in the Company’s Quarterly Report on Form 10-Q to be filed with the SEC.
Free Cash Flow is a non- GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. This measure is calculated as net cash provided by (used in) operating activities less purchases of and deposits on property, plant and equipment. The Free Cash Flow reconciliation is presented within this news release and explained in the Company’s Quarterly Report on Form 10-Q to be filed with the SEC.
Adjusted Gross Margin and Adjusted Gross Margin Percentage are non-GAAP measures used by management that are not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted Gross Margin is calculated as gross margin excluding restructuring and other charges recorded in cost of goods sold, and charges related to the flow-through of inventory step-up on business combinations. Adjusted Gross Margin Percentage is calculated as Adjusted Gross Margin divided by net revenue. The Adjusted Gross Margin and Adjusted Gross Margin Percentage reconciliation is presented within this news release.
About Canopy Growth Corporation
Canopy Growth (TSX:WEED,NASDAQ:CGC ) is a world-leading diversified cannabis and cannabinoid-based consumer product company, driven by a passion to improve lives, end prohibition, and strengthen communities by unleashing the full potential of cannabis. Leveraging consumer insights and innovation, we offer product varieties in high quality dried flower, oil, softgel capsule, infused beverage, edible, and topical formats, as well as vaporizer devices by Canopy Growth and industry-leader Storz & Bickel. Our global medical brand, Spectrum Therapeutics, sells a range of full-spectrum products using its colour-coded classification system and is a market leader in both Canada and Germany. Through our award-winning Tweed and Tokyo Smoke banners, we reach our adult-use consumers and have built a loyal following by focusing on top quality products and meaningful customer relationships. Canopy Growth has entered into the health and wellness consumer space in key markets including Canada, the United States, and Europe through BioSteel sports nutrition, and This Works skin and sleep solutions; and has introduced additional federally-permissible CBD products to the United States through our First & Free and Martha Stewart CBD brands. Canopy Growth has an established partnership with Fortune 500 alcohol leader Constellation Brands. For more information visit www.canopygrowth.com.
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. 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 uncertainties associated with the COVID-19 pandemic, including our ability, and the ability of our suppliers and distributors, to effectively manage the restrictions, limitations and health issues presented by the COVID-19 pandemic, the ability to continue our production, distribution and sale of our products and the demand for and use of our products by consumers, disruptions to the global and local economies due to related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations and a reduction in discretionary consumer spending;
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 to U.S. hemp (including CBD) products and the scope of any regulations by the U.S. Food and Drug Administration (the “FDA”), the U.S. Drug Enforcement Administration (the “DEA”), the U.S. Federal Trade Commission (the “FTC”), the U.S. Patent and Trademark Office (the “USPTO”), the U.S. Department of Agriculture (the “USDA”) and any state equivalent regulatory agencies over U.S. hemp (including CBD) products;
expectations regarding the laws and regulations and any amendments thereto relating to the U.S. hemp industry in the U.S., including the promulgation of regulations for the U.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 amended plan of arrangement with Acreage Holdings, Inc., including the consummation of such acquisition;
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;
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, including proceeds to us that may result therefrom or the potential conversion of the convertible senior notes issued by Canopy Growth and 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 recreational 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 recreational 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;
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 expansion of our production and manufacturing, the costs and timing associated therewith and the receipt of applicable production and sale licenses;
the expected growth in 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; 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; (xiii) our ability to continue to operate in light of the COVID-19 pandemic and the impact of the pandemic on demand for, and sales of, our products and our distribution channels; and (xiv) 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.
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 Securities and Exchange Commission (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, changes in laws, regulations and guidelines and our compliance with such laws, regulations and guidelines; the risk that the COVID-19 pandemic may disrupt our operations and those of our suppliers and distribution channels and negatively impact the demand for and use of our products; consumer demand for cannabis and U.S. hemp products; our limited operating history; the risks and uncertainty regarding future product development; our reliance on licenses issued by and contractual arrangements with various federal, state and provincial governmental authorities; the risk that cost savings and any other synergies from the CBI Group Investments may not be fully realized or may take longer to realize than expected; risks associated with jointly owned investments; risks relating to our current and future operations in emerging markets; future levels of revenues and the impact of increasing levels of competition; risks related to the protection and enforcement of our intellectual property rights; our ability to manage disruptions in credit markets or changes to our credit ratings; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; risks related to the integration of acquired businesses; the timing and manner of the legalization of cannabis in the United States; business strategies, growth opportunities and expected investment; 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); counterparty risks and liquidity risks that may impact our ability to obtain loans and other credit facilities on favorable terms; the potential effects of judicial, regulatory or other proceedings, or threatened litigation or proceedings, on our business, financial condition, results of operations and cash flows; risks related to stock exchange restrictions; risks associated with divestment and restructuring; volatility in and/or degradation of general economic, market, industry or business conditions; our exposure to risks related to an agricultural business, including wholesale price volatility and variable product quality; third-party transportation risks; 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 U.S. hemp products in vaping devices; the anticipated effects of actions of third parties such as competitors, activist investors or federal, state, provincial, territorial or local regulatory authorities, self-regulatory organizations, plaintiffs in litigation or persons threatening litigation; changes in regulatory requirements in relation to our business and products; and the factors discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended March 31, 2021. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.
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,
2021
March 31,
2021
ASSETS
Current assets:
Cash and cash equivalents
$559,840
$1,154,653
Short-term investments
1,491,286
1,144,563
Restricted short-term investments
14,336
11,332
Amounts receivable, net
106,455
92,435
Inventory
411,675
367,979
Prepaid expenses and other assets
91,584
67,232
Total current assets
2,675,176
2,838,194
Other financial assets
791,658
708,167
Property, plant and equipment
1,142,614
1,074,537
Intangible assets
347,063
308,167
Goodwill
2,000,458
1,889,354
Other assets
9,514
5,061
Total assets
$6,966,483
$6,823,480
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$91,339
$67,262
Other accrued expenses and liabilities
79,938
100,813
Current portion of long-term debt
15,705
9,827
Other liabilities
69,148
106,428
Total current liabilities
256,130
284,330
Long-term debt
1,545,073
1,573,136
Deferred income tax liabilities
26,570
21,379
Liability arising from Acreage Arrangement
450,000
600,000
Warrant derivative liability
299,318
615,575
Other liabilities
109,038
107,240
Total liabilities
2,686,129
3,201,660
Commitments and contingencies
Redeemable noncontrolling interest
135,300
135,300
Canopy Growth Corporation shareholders’ equity:
Common shares – $nil par value; Authorized – unlimited number of shares;
Issued – 393,119,100 shares and 382,875,179 shares, respectively
7,463,557
7,168,557
Additional paid-in capital
2,413,779
2,415,650
Accumulated other comprehensive loss
(61,518)
(34,240)
Deficit
(5,675,738)
(6,068,156)
Total Canopy Growth Corporation shareholders’ equity
4,140,080
3,481,811
Noncontrolling interests
4,974
4,709
Total shareholders’ equity
4,145,054
3,486,520
Total liabilities and shareholders’ equity
$6,966,483
$6,823,480
Schedule 2
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of Canadian dollars, except number of shares and per share data, unaudited)
Three months ended June 30,
2021
2020
Revenue
$155,423
$119,088
Excise taxes
19,214
8,672
Net revenue
136,209
110,416
Cost of goods sold
108,971
103,921
Gross margin
27,238
6,495
Operating expenses:
Selling, general and administrative expenses
112,574
135,392
Share-based compensation
13,126
30,685
Asset impairment and restructuring costs
89,249
12,794
Total operating expenses
214,949
178,871
Operating loss
(187,711)
(172,376)
Loss from equity method investments
(100)
(7,189)
Other income (expense), net
580,666
48,205
Income (loss) before income taxes
392,855
(131,360)
Income tax (expense) recovery
(2,900)
3,038
Net income (loss)
389,955
(128,322)
Net loss attributable to
noncontrolling interests and redeemable
noncontrolling interest
(2,463)
(19,821)
Net income (loss) attributable to Canopy Growth
Corporation
$392,418
$(108,501)
Basic earnings (loss) per share
$1.02
$(0.30)
Basic weighted average common shares outstanding
384,055,133
363,763,347
Diluted earnings (loss) per share
$0.84
$(0.30)
Diluted weighted average common shares outstanding
404,546,243
363,763,347
Schedule 3
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars, unaudited)
Three months ended June 30,
2021
2020
Cash flows from operating activities:
Net income (loss)
$389,955
$(128,322)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property, plant and equipment
17,116
17,415
Amortization of intangible assets
8,016
16,632
Share of loss on equity method investments
100
7,189
Share-based compensation
13,126
30,685
Asset impairment and restructuring costs
89,249
12,794
Income tax expense (recovery)
2,900
(3,038)
Non-cash foreign currency
(17,846)
8,688
Interest paid
(23,666)
(57)
Change in operating assets and liabilities, net of effects from purchases
of businesses:
Amounts receivable
(4,946)
17,577
Prepaid expenses and other assets
(8,804)
(16,059)
Inventory
44,228
(10,772)
Accounts payable and accrued liabilities
(16,960)
3,755
Other, including non-cash fair value adjustments
(658,248)
(75,033)
Net cash used in operating activities
(165,780)
(118,546)
Cash flows from investing activities:
Purchases of and deposits on property, plant and equipment
(20,279)
(61,547)
Purchases of intangible assets
(833)
(3,088)
Proceeds on sale of intangible assets
–
18,337
Purchases of short-term investments
(346,603)
(382,486)
Net cash proceeds on sale of subsidiaries
10,324
–
Sale of (investments in) other financial assets
56
(2,564)
Recovery of amounts related to construction financing
–
10,000
Payment of acquisition related liabilities
(8,367)
(4,511)
Net cash outflow on acquisition of noncontrolling interests
–
(125)
Net cash outflow on acquisition of subsidiaries
(8,857)
–
Net cash used in investing activities
(374,559)
(425,984)
Cash flows from financing activities:
Payment of share issue costs
(444)
(595)
Proceeds from issuance of shares by RIV Capital
–
92
Proceeds from exercise of stock options
3,592
4,722
Proceeds from exercise of warrants
–
244,990
Issuance of long-term debt
–
4,439
Repayment of long-term debt
(48,116)
(6,345)
Net cash (used in) provided by financing activities
(44,968)
247,303
Effect of exchange rate changes on cash and cash equivalents
(9,506)
(30,079)
Net decrease in cash and cash equivalents
(594,813)
(327,306)
Cash and cash equivalents, beginning of period
1,154,653
1,303,176
Cash and cash equivalents, end of period
$559,840
$975,870
Schedule 4
Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure)
Three months ended June 30,
(in thousands of Canadian dollars except where indicated; unaudited)
2021
2020
Net revenue
$136,209
$110,416
Gross margin, as reported
27,238
6,495
Adjustments to gross margin:
Charges related to the flow-through of inventory
step-up on business combinations
1,414
1,213
Adjusted gross margin1
$28,652
$7,708
Adjusted gross margin percentage1
21%
7%
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)
2021
2020
Net income (loss)
$389,955
$(128,322)
Income tax expense (recovery)
2,900
(3,038)
Other (income) expense, net
(580,666)
(48,205)
Loss on equity method investments
100
7,189
Share-based compensation2
13,126
30,685
Acquisition-related costs
5,780
1,394
Depreciation and amortization2
25,132
34,047
Asset impairment and restructuring costs
78,618
12,794
Charges related to the flow-through of inventory
step-up on business combinations
1,414
1,213
Adjusted EBITDA1
$(63,641)
$(92,243)
1Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures”.
2 From Condensed Interim Consolidated Statements of Cash Flows.
Schedule 6
Free Cash Flow Reconciliation1
Three months ended June 30,
(in thousands of Canadian dollars, unaudited)
2021
2020
Net cash used in operating activities
$(165,780)
$(118,546)
Purchases of and deposits on property, plant and equipment
(20,279)
(61,547)
Free cash flow1
$(186,059)
$(180,093)
1Free cash flow is a non-GAAP measure. See “Non-GAAP Measures”.
Schedule 7
Segmented Gross Margin Reconciliation
Three months ended June 30,
(in thousands of Canadian dollars, unaudited)
2021
2020
Global cannabis segment
Net revenue
$92,939
$79,282
Cost of goods sold
79,570
86,140
Gross margin
13,369
(6,858)
Gross margin percentage
14%
(9%)
Other consumer products segment
Revenue
$43,270
$31,134
Cost of goods sold
29,401
17,781
Gross margin
13,869
13,353
Gross margin percentage
32%
43%
Schedule 8
Segmented Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure)
Three months ended
(in thousands of Canadian dollars except where indicated; unaudited)
June 30, 2021
June 30, 2020
Global cannabis segment
Net revenue
$92,939
$79,282
Gross margin, as reported
13,369
(6,858)
Adjustments to gross margin:
Charges related to the flow-through of inventory
step-up on business combinations
1,414
–
Adjusted gross margin1
$14,783
$(6,858)
Adjusted gross margin percentage1
16%
(9%)
Other consumer products segment
Revenue
$43,270
$31,134
Gross margin, as reported
13,869
13,353
Adjustments to gross margin:
Charges related to the flow-through of inventory
step-up on business combinations
–
1,213
Adjusted gross margin1
$13,869
$14,566
Adjusted gross margin percentage1
32%
47%
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
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
