SMITHS FALLS, Ontario,
February 15, 2019 /PRNewswire/ --
- Cannabis shipments totaled 10,102 kilograms and kilogram
equivalents.
- Net income of $74.9 million,
including changes in fair values of financial liabilities included
in Other Income.
- Closed the previously announced $5
billion investment by Constellation Brands Inc and began
putting that capital to work for shareholders with key acquisitions
of Storz & Bickel and the assets of ebbu Inc.
- Expanded to new markets including United Kingdom and Peru, and announced intention to establish
operations in New York State,
marking the Company's entry into the US hemp market.
- Intellectual property portfolio grew to 32 issued patents
and over 140 patent applications, covering a range of target areas
from technology to genetics to clinical
formulations.
Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) ("Canopy
Growth" or "the Company") today released its consolidated financial
results for the third quarter fiscal 2019 ended December 31, 2018. All financial
information in this press release is reported in Canadian dollars,
unless otherwise indicated.
Third Quarter Fiscal 2019 Operational and Financial Highlights
Q3 2019 Q3 2018 % Change
Net revenue (millions) $83.0 $21.7 282%
Kilograms and kilogram equivalents sold 10,102 2,330 334%
Average Selling Price per gram - Recreational $6.96 - NM
Average Selling Price per gram - Canadian Medical $9.77 $8.21 19%
Average Selling Price per gram - International Medical $13.28 $12.61 5%
Average Selling Price per gram $7.33 $8.30 -12%
Inventory & Biological Assets (millions) $216 $108 100%
Kilograms harvested (kilograms) 7,556 7,961 -5%
Cash, cash equivalents and marketable securities (millions) $4,915 $429 1046%
NM = Not Meaningful
Third Quarter Fiscal 2019 Revenue Highlights
Q3 2019 Q3 2018 % Change
Canadian Recreational Cannabis Gross Revenue -
Business to Business $60.1 - NM
Canadian Recreational Cannabis Gross Revenue -
Business to Consumer $11.5 - NM
Canadian Recreational Cannabis Revenue - Subtotal $71.6 - NM
Canadian Medical Cannabis Gross Revenue $15.9 $19.3 -18%
International Medical Cannabis Gross Revenue $2.7 $1.0 170%
Medical Revenue - Subtotal $18.6 $20.3 -8%
Other Revenue $7.5 $1.4 436%
Total Gross Revenue $97.7 $21.7 350%
Less Excise Taxes $14.7 - NM
Net Revenue $83.0 $21.7 282%
NM = Not Meaningful
Third Quarter Fiscal 2019 Product Sales Highlights
Product Sales (Kilograms & kilogram
equivalents) Q3 2019 Q3 2018 % Change
Canadian Recreational Cannabis - Business to
Business 7,381 0 NM
Canadian Recreational Cannabis - Business to
Consumer 906 0 NM
Canadian Medical Cannabis 1,611 2,254 -29%
International Medical Cannabis 204 76 168%
Total 10,102 2,330 334%
NM = Not Meaningful
Management Commentary
"Our successful first full quarter with recreational sales in
Canada reinforces our long held
strategy of making meaningful investments early in order to secure
market share," said Bruce Linton,
Chairman & Co-CEO, Canopy Growth. "With a strong cash position,
we added strategic assets and IP through acquisitions to accelerate
the sophistication of our inputs with ebbu, and our consumer-facing
outputs with Storz and Bickel."
"The Canadian recreational cannabis market will be dominated in
the long term by businesses delivering excellent products and
consumer experiences. Sales from the first wave of products and
retail environments launched in the third quarter demonstrate that
we are capturing consumers' attention."
Concluded Linton, "We have developed an unprecedented and
unparalleled fully integrated platform at scale and will continue
to expand by making strategic production investments in regions
with federally permissible paths to market for our cannabis and
hemp offerings. We believe this strategy will develop a significant
and sustained return on invested capital over the long-term."
Product & Production Summary
Oils, including the Company's Softgel capsules, accounted for
33% of product revenue (reported net revenue excluding other
revenue) in the three months ended December
31, 2018, up from 23% of product revenue in the same period
last year, demonstrating an increased demand for value-added
formats. During the third quarter of fiscal 2019,
approximately 30% and 42% of recreational and medical sales,
respectively, were comprised of oils, including Softgel
capsules.
To position Canopy Growth to supply the significant quantities
of cannabis oil that the Company expects will be required to meet
the needs of future value added products including vape pens and
beverages, the Company took steps during the quarter to augment its
owned current and planned extraction capacity by entering into
extraction supply related agreements with Valens GroWorks Corp.,
Medipharm Labs Corp., and POS Holdings Inc. ("POS Holdings").
In addition, during the quarter, the Company completed the terms of
a financing related agreement with POS Holdings to lock in
dedicated extraction support to Canopy Growth.
In the transition from a "medical marijuana" business to a
business producing clinically proven cannabinoid therapies, the
Company experienced a decline in its Canadian medical market demand
in the quarter. The decline may be attributed to the initial
adjustment to the available legal recreational market which
patients can also access. Additionally, medical revenues
reflected a migration to a tighter medical product range as well as
elevating and re-focusing Spectrum Cannabis to a more pure
medical/pharma focused brand proposition.
International medical revenues in the three months ended
December 31, 2018, consisting
primarily of sales in Germany,
increased by 170 percent over the same quarter in the prior year to
$2.7 million.
Other revenue for the quarter was $7.5
million, coming from partner clinic revenue, merchandise
sales, and device sales by the Company's wholly-owned subsidiary
Storz & Bickel following the close of its acquisition on
December 6, 2018.
Canadian Regulated Adult Use Market
- Cannabis Sales
The Company placed significant focus on shipping core products,
backed by deep inventory levels, into physical retail store
networks across the country. In the face of strong product
demand and overall sector supply shortages, the inventory levels
have served to improve the availability of the Company's products
on retail store shelves. Also, at the end of the quarter, the
Company began shipping value-added Softgel capsules and pre-rolled
joint products in recreational channels across the country.
Canadian Regulated Adult Use Market
- Retail Footprint
Canopy Growth finalized its acquisition of HIKU during the
second quarter, adding the Tokyo Smoke retail channel to complement
its Tweed banner stores. Offering two distinct customer experiences
will allow the Company to appeal to various consumer demographics
without saturating any single segment. Tokyo Smoke operates four
corporate owned retail cannabis stores and an e-commerce platform
in Manitoba. Tweed retail now has
10 corporate owned locations selling cannabis across Newfoundland & Labrador and Manitoba, plus a licensed store in
Saskatchewan and an e-commerce
presence in Manitoba and
Nunavut. The Company
plans to add, in provinces with private retail models, 20
additional Tweed stores and 20 additional Tokyo Smoke stores. In
the province of Ontario, the
company is exploring partnership opportunities to ensure consumers
in that market can experience the distinct Tweed and Tokyo Smoke
retail experiences while working within the provincial
framework.
Third Quarter Fiscal 2019 Gross
Margin1 Summary
The Company is in the final stages of completing its Canadian
production and extraction platform. The cost of sales includes the
impact of operating costs of cannabis cultivation subsidiaries not
fully commissioned, including our Delta greenhouse and a number of zones at the
Aldergrove greenhouse facility,
both going through fit-ups, as well as Edmonton and Fredericton, also in construction during the
quarter. Vert Mirabel also
initiated its first pilot grow cycle, which combined with the other
non-producing assets to result in higher non-recurring overheads.
Cost of sales also included costs associated with developing edible
and beverage products for which markets will be available later in
calendar 2019. Excluding the costs associated with these
non-cultivating subsidiaries totaling approximately $13.1 million and absorbing medical excise taxes
of $2.1 million in order to ease the
burden imposed on patients, the gross
margin2 before the fair value impacts in cost of
sales and other inventory charges would have been $33.5 million or 40% of sales. Gross margin was
also impacted by lower average recreational business to business
prices, as compared to historic direct to consumer medical
sales.
Greenhouse facilities operate in zones. Aldergrove, Delta and Mirabel have been planted in a manner that
allows for ongoing harvests, rather than one large harvest, to
increase the utilization of assets such as post harvest processes
and provide for a steady supply of product going forward. The
Aldergrove greenhouse began its
third harvest earlier in the current quarter and the Delta facility is expected to begin its next
harvest later in the current quarter.
The Company believes gross margins will expand in the coming
quarters when all of its cultivation facilities reach full
utilization and cycle through initial pilot harvests to be high
performing assets. In addition, margins are expected to
expand when edibles and beverages are introduced later in calendar
2019 with lower costs of active ingredients per serving.
Third Quarter Fiscal 2019 Operating Expense
Summary
Three months ended
As a % of As a % of
December 31, Net December 31, Net
2018 Revenue 2017 Revenue
(CDN $000's)
Operating Expenses
Sales and marketing $ 44,895 54% $ 9,409 43%
Research and
development 5,264 6% 287 1%
General and
administration 46,088 55% 11,050 51%
Acquisition-related
costs 4,520 5% 790 4%
Share-based
compensation
expense 63,911 77% 17,879 82%
Depreciation and
amortization 5,015 6% 3,147 15%
Total operating
expenses $ 169,693 $ 42,562
Nine months ended
As a % of As a % of
December 31, Net December 31, Net
2018 Revenue 2017 Revenue
(CDN $000's)
Operating Expenses
Sales and marketing $ 101,208 77% $ 23,452 43%
Research and
development 7,964 6% 914 2%
General and
administration 102,777 78% 26,936 49%
Acquisition-related
costs 9,606 7% 2,491 5%
Share-based
compensation
expense 189,833 143% 28,936 52%
Depreciation and
amortization 11,640 9% 9,974 18%
Total operating
expenses $ 423,028 $ 92,703
Businesses built on top quality product and customer service
require upfront investment. Management believes foundational
investment is required to build the Company's significant and
diversified production platform, flexible distribution capability,
world-leading brands, retail capabilities, medical and recreational
sales and customer support capabilities. Canopy Growth also
requires robust information technology infrastructure,
international business development and operations. These
investments directly impacted profitability in the quarter but
represent prudent long term investments to strengthen the Company's
global leadership position. Both sales and marketing and general
and administrative expenses were up significantly relative to the
same period last year. Management expects these expenses to
level off in the near term in its Canadian operations.
The Company's Applied Science team is researching a variety of
intellectual property opportunities including those relating to
growth patterns under different environmental scenarios and the
genetics of various strains, the development of patent pending
technology related to equipment that the Company has engineered
specifically for the cannabis industry to be incorporated in Canopy
Growth's operations and ongoing R&D work being performed in the
Company's Dealers License Area that is expected to lead to the
development of new cannabis-based product form factors that will
enter the market when permitted. With the acquisition of Canopy
Health Innovations, the additional scope of R&D being
undertaken and additional resourcing necessary, R&D expenses
were up significantly over the same period last year. Applied
Science expenses will continue to increase as the Company
aggressively pursues IP. Advancing scientific understanding through
plant science, technological applications, and clinical trials is
the fastest path to developing sustainable high margin
products.
Acquisition-related expenses in the third quarter period ended
December 31, 2018 were primarily
related to the acquisitions of the assets of ebbu Inc. and Storz
& Bickel and the financing of POS Holdings. In addition, costs
were incurred due to the ongoing evaluation of potential
acquisitions performed during the period and increased legal,
accounting and strategic business consulting services required to
complete or evaluate the transactions. The Company is likely
to acquire additional strategic assets in the future as it pursues
its business strategy.
In respect of the recorded stock compensation expense, in
practice, all employees of the Company receive stock options as
part of their compensation package. Acquisition-related milestone
payments based on future performance and related criteria have been
treated as stock compensation expense instead of being allocated to
the purchase price.
Third Quarter Fiscal 2019 Adjusted
EBITDA Summary (Non-GAAP
measure)2
Adjusted EBITDA in the third quarter fiscal 2019 amounted to a
loss of $75.1 million compared to a
loss of $5.7 million in the same
period last year.
Year-to-date, Adjusted EBITDA amounted to a loss of $69.0 million compared to a loss of $14.4 million in the same period last year.
The Adjusted EBITDA is reconciled and explained in the
Management's Discussion & Analysis under "Adjusted EBITDA
(Non-GAAP Measure)" a copy of which will be filed on SEDAR and
EDGAR after financial markets close today. The Adjusted EBITDA is
reconciled in a table elsewhere in this press
release.
Third Quarter Fiscal Year 2019 Other
Income and Net Earnings
Summary
Other income of $235.2 million for
the three months ended December 31,
2018 was primarily made up of fair value changes on
financial assets and financial liabilities. The amount includes a
fair value gain of $185.8 million
arising from the decrease in the fair value of the senior
convertible notes from the end of the second quarter to the end of
the third quarter and a fair value gain of $36.4 million on financial assets, principally
the TerrAscend and Slang warrants.
The Company also had interest income of $18.6 million on cash and marketable
securities. This income was partly offset by a loss of $6.3 million as a result of the TerrAscend
restructuring which resulted in the exchange of the TerrAscend
shares and warrants for the non-voting, non-participating
exchangeable shares.
The Company recorded an income tax expense of $1.0 million for the three months ended
December 31, 2018. In the
comparative period last year, the Company recorded income tax
expense of $7.6 million.
Net income for the three months ended December 31, 2018 was $74.9 million compared to a net income of
$11.0 million in the comparative
period last year.
Other income of $63.5 million for
the nine months ended December 31,
2018 is primarily made up of fair value changes on financial
assets and financial liabilities, and a gain on the acquisition of
the Company's unowned interest in CHI.
The Company recorded an income tax recovery of $1.4 million for the nine months ended
December 31, 2018. In the comparative
period last year, the Company recorded income tax expense of
$9.6 million.
Net loss for the nine months ended December 31, 2018 was $346.7 million compared to net income of
$227 thousand in the comparative
period last year.
Update on Intellectual Property
Development
During the third quarter, Canopy Animal Health ("CAH") completed
certain pre-clinical studies related to the treatment of
anxiety in companion animals using CBD. In addition, CAH completed
certain cannabis consumption safety trials which produced data
critical to validating the safety of cannabis-based therapeutic
products for animals.
Subsequent to the end of the quarter, Canopy Health Innovations
began Phase IIb "in-human" clinical trials to evaluate the use of
medical cannabis in the treatment of insomnia. The trials are being
conducted in collaboration with a leading Canadian research
institution.
During the quarter, the Company acquired the assets, including
over 40 cannabis-related patent applications filed representing
over 1,500 invenctions, of Colorado-based hemp researcher, ebbu.
Intellectual property and R&D advancements achieved by ebbu's
team apply directly to Canopy Growth's hemp and THC-rich cannabis
genetic breeding program. The Company believes applying ebbu's IP
has the potential to reduce the cost of CBD production. In
addition, ebbu's IP portfolio will contribute to the clinical
formulations program being executed by Canopy Health
Innovations.
The Company's Intellectual Property portfolio includes 32 issued
patents and over 140 patent applications covering hardware, product
formulation, genetics, production innovation and medical
treatments.
Update on Branding and Market Activities
The Company adheres to a disciplined approach to portfolio
expansion as it continues to identify new market opportunities by
identifying the needs that brands could satisfy for adults in the
legalized cannabis market and assessing both the economic appeal of
meeting these needs and their fit with the positioning of existing
brands. Canopy Growth has built a portfolio of belief-led and
purpose-driven brands, with authentic origin stories and distinct
points of view on the world, spanning both local and global
provenance.
The Company brought Tweed, the Company's core brand, to the
recreational market. As part of the national launch strategy,
Tweed has had a strong focus on building awareness through
exclusive media partnerships, experiential activations, and
proprietary responsibility programs like the "Don't Drive High"
program undertaken in collaboration with Uber & MADD Canada.
The focus to engage and educate consumers across the country both
pre and post-launch, along with Tweed's retail store network has
resulted in Tweed securing aided awareness of 20% amongst cannabis
consumers and intenders. In addition to its core consumer
brand, Tweed, Canadian adults also saw the successful recreational
launch of Tokyo Smoke and DOJA, as well as partner brands LBS and
DNA Genetics.
During the quarter, Canopy Growth also launched new and improved
product offerings like oral cannabis sprays and pre-rolled joints
made by our custom-built, proprietary automated cannabis joint
rolling machines right in the heart of our Smiths Falls headquarters. The Company also
unveiled its one-of-a-kind custom packaging - a unique and
proprietary child-resistant, air-tight tin. Canopy Growth's
strategic approach to supply and distribution allowed the Company
to provide Canadian adults from coast-to-coast with a diverse
offering of high-quality cannabis products.
The Company is also developing product line extensions and
format-specific brands for value-added product categories including
vape, beverage and other products that are expected to be permitted
for sale in the fourth quarter of calendar 2019.
Investing to Capitalize on Hemp and CBD Product
Opportunities
The Company has built on decades of experience of its
world-class hemp team to develop proprietary and patent-pending
technological solutions to optimize the speed and efficiency of
harvest, post-harvest, and storage processes required to run
field-scale hemp operations. In the third quarter, Canopy
Growth's hemp division harvested thousands of acres of CBD-rich
hemp genetics in Saskatchewan.
Once extracted, the Company expects a yield of thousands of
kilograms of hemp-derived CBD.
In the United States, the
Agricultural and Nutrition Act, H.R. 2 (the "Farm Bill")
passed on December 20, 2018.
The passage of the Farm Bill,which included the language of the
Hemp Farming Act of 2018, expands opportunities related to the
cultivation and processing of Hemp to produce CBD-based products in
the United States. On January 14, 2019, Canopy Growth
announced that it had been granted a hemp processing and production
license by New York State and its
commitment to invest in the state of New
York to establish a Hemp Industrial Park. The Hemp
Industrial Park will be home to large-scale production capabilities
focused on hemp extraction and product manufacturing to serve the
New York state market as well as
markets around the United States
as permitted by regulations. Canopy Growth intends to invest
between $100 million USD and
$150 million USD in its New York operations. Canopy Growth is
developing a broad portfolio of CBD product offerings, to be
broadly distributed across multiple channels, with a view to
establishing category leadership in each CBD vertical
market. The Company will look to leverage strategic
acquisitions and partners to accelerate growth in the CBD consumer
product market in the United
States.
CFO Transition
Canopy Growth's EVP & Chief Financial Officer Tim Saunders has informed the Company and its
Board of Directors of his decision to retire as CFO in mid to late
calendar 2019. Tim will continue to serve as CFO until his
successor has transitioned into the role. The search for Tim's
replacement is already in process, with candidates identified, and
the Company expects to announce his successor in the next few
months. Following the transition, Tim will continue to serve the
executive team and Board of Directors of Canopy Growth as a
strategic advisor in areas of mergers and acquisitions, corporate
financing, and business transformation. The Board of Directors,
co-CEOs Bruce Linton and
Mark Zekulin, along with the whole
Canopy family, thank Tim for his dedication and leadership. Having
championed the financial health of the Company through an
aggressive phase of M&A growth, multiple financing rounds, and
historic listings on the TSX and NYSE, both firsts for cannabis
companies, Tim's mark on Canopy Growth is permanent and sincerely
appreciated.
The unaudited Consolidated Financial Statements and Management's
Discussion and Analysis documents for the three and six months
ended December 31, 2018 will be filed
on SEDAR after financial markets close today, February 14, 2018, and will be available at
www.sedar.com. The basis of financial reporting in the Unaudited
Condensed Interim Consolidated Financial Statements and
Management's Discussion and Analysis documents is in thousands of
Canadian dollars, unless otherwise indicated.
Note 1: The Gross margin before the fair value
effects of the IFRS accounting for biological assets and inventory
is a key operational metric that does not have any standardized
meaning prescribed by IFRS and may not be comparable to similar
measures presented by other companies. The definition of this
term can be found in the Management's Discussion & Analysis
under GROSS MARGIN, a copy of which will be filed on SEDAR after
financial markets close today.
Note 2: The Adjusted EBITDA is a non-GAAP financial
measure that does not have any standardized meaning prescribed by
IFRS and may not be comparable to similar measures presented by
other companies. The Adjusted EBITDA is reconciled and explained in
the Management's Discussion & Analysis under "Adjusted EBITDA
(Non-GAAP Measure)", a copy of which will filed on SEDAR after
financial markets close today.
Webcast and Conference Call Information
The Company will host a conference call and audio webcast with
Bruce Linton, Chairman & Co-CEO
and Tim Saunders, CFO at
8:30 AM Eastern Time on February 15, 2019.
Webcast Information
A live audio webcast will be available at:
https://event.on24.com/wcc/r/1913031/9F3A6AC5FFF944BE38A01DF2D130074D
Calling Information
Toll Free Dial-In Number: 1-888-231-8191
International Dial-In Number: (647)427-7450
Conference ID: 4179499
Replay Information
A replay of the call will be accessible by telephone until
11:59 PM ET on May 14, 2019.
Toll Free Dial-in Number: 1-855-859-2056
Replay Password: 4179499
About Canopy Growth Corporation
Canopy Growth is a world-leading diversified cannabis and hemp
company, offering distinct brands and curated cannabis varieties in
dried, oil and Softgel capsule forms. Canopy Growth offers
medically approved vaporizers through the Company's subsidiary,
Storz & Bickel GMbH & Co. KG. From product and process
innovation to market execution, Canopy Growth is driven by a
passion for leadership and a commitment to building a world-class
cannabis company one product, site and country at a time. The
Company has operations in over a dozen countries across five
continents.
The Company is proudly dedicated to educating healthcare
practitioners, conducting robust clinical research, and furthering
the public's understanding of cannabis, and through its wholly
owned subsidiary, Canopy Health Innovations ("Canopy Health"), has
devoted millions of dollars toward cutting edge, commercializable
research and IP development. Canopy Growth works with the Beckley
Foundation and has launched Beckley Canopy Therapeutics to research
and develop clinically validated cannabis-based medicines, with a
strong focus on intellectual property protection. Canopy Growth
acquired assets of leading hemp research company, ebbu, Inc.
("ebbu"). Intellectual Property ("IP") and R&D advancements
achieved by ebbu's team apply directly to Canopy Growth's hemp and
THC-rich cannabis genetic breeding program and its cannabis-infused
beverage capabilities. Through partly owned subsidiary Canopy
Rivers Corporation, the Company is providing resources and
investment to new market entrants and building a portfolio of
stable investments in the sector.
From our historic public listing on the Toronto Stock Exchange
and New York Stock Exchange to our continued international
expansion, pride in advancing shareholder value through leadership
is engrained in all we do at Canopy Growth. Canopy Growth has
established partnerships with leading sector names including
cannabis icon Snoop Dogg, breeding legends DNA Genetics and Green
House seeds, Battelle, the world's largest nonprofit research and
development organization, and Fortune 500 alcohol leader
Constellation Brands, to name but a few. Canopy Growth operates ten
licensed cannabis production sites with over 4.3 million square
feet of production capacity, including over 500,000 square feet of
GMP certified production space. The Company operates Tweed retail
stores in Newfoundland and
Manitoba and has entered into
supply agreements with every Canadian province and territory. For
more information visit www.canopygrowth.com
Notice Regarding Forward Looking
Statements
This news release contains forward-looking information. Often,
but not always, forward-looking information can be identified by
the use of words such as "plans", "expects" or "does not expect",
"is expected", "estimates", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
Forward-looking information involves known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Canopy Growth or its subsidiaries to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking
information contained in this news release. Examples of such
statements include statements with respect to the future market
share achieved in recreational markets, product development,
clinical trial work, and planned acquisition activities related to
BC Tweed, and Canopy Health Innovations. Risks, uncertainties
and other factors involved with forward-looking information could
cause actual events, results, performance, prospects and
opportunities to differ materially from those expressed or implied
by such forward-looking information, including risks associated
with entering a new market dynamic in Canada or internationally, and such risks
contained in the Company's annual information form dated June
28, 2017 and filed with Canadian securities regulators
available on the Company's issuer profile on SEDAR
at www.sedar.com. Although the Company believes that the
assumptions and factors used in preparing the forward-looking
information in this news release are reasonable, undue reliance
should not be placed on such information and no assurance can be
given that such events will occur in the disclosed time frames or
at all. The forward-looking information included in this news
release are made as of the date of this news release and the
Company does not undertake an obligation to publicly update such
forward-looking information to reflect new information, subsequent
events or otherwise unless required by applicable securities
legislation.
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
UNAUDITED December 31, March 31,
(Expressed in CDN $000's) 2018 2018
Assets
Current assets
Cash and cash equivalents $ 4,115,870 $ 322,560
Marketable securities 799,418 -
Amounts receivable 95,476 21,425
Biological assets 31,013 16,348
Inventory 184,961 101,607
Prepaid expenses and other
assets 50,439 19,837
5,277,177 481,777
Property, plant and equipment 960,158 303,682
Other long-term assets 32,919 8,340
Investments in associates and
joint ventures 103,773 63,106
Other financial assets 281,928 163,463
Intangible assets 168,536 101,526
Goodwill 1,815,624 314,923
$ 8,640,115 $ 1,436,817
Liabilities
Current liabilities
Accounts payable and accrued
liabilities $ 215,612 $ 89,571
Deferred revenue 263 900
Current portion of long-term
debt 18,447 1,557
Other current liabilities 61,357 -
295,679 92,028
Long-term debt 773,049 6,865
Deferred tax liability 25,703 33,536
Other long-term liabilities 122,006 61,150
1,216,437 193,579
Commitments and contingencies
Shareholders' equity
Share capital 5,947,715 1,076,838
Other reserves 1,645,441 127,418
Accumulated other
comprehensive income 76,584 46,166
Deficit (441,480) (91,649)
Equity attributable to Canopy
Growth Corporation 7,228,260 1,158,773
Non-controlling interests 195,418 84,465
Total equity 7,423,678 1,243,238
$ 8,640,115 $ 1,436,817
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2018 AND 2017
UNAUDITED Three months ended Nine months ended
December December
31, 31, December 31, December 31
(Expressed in CDN
$000's except share
amounts) 2018 2017 2018 2017
(As (As Restated
Restated - -
see note 3) see note 3)
21,70 146,94
Revenue $ 97,703 $ 0 $ 6 $ 55,142
Excise taxes 14,655 - 14,655 -
Net revenue 83,048 21,700 132,291 55,142
Inventory
production costs
expensed to cost of
sales 64,758 9,811 96,349 25,073
Gross margin before
the undernoted 18,290 11,889 35,942 30,069
Fair value changes
in biological
assets included in
inventory sold and
other charges 28,105 24,204 105,989 47,836
Unrealized gain on
changes in fair
value of biological
assets (22,267) (28,845) (90,500) (79,221)
Gross margin 12,452 16,530 20,453 61,454
Sales and marketing 44,895 9,409 101,208 23,452
Research and
development 5,264 287 7,964 914
General and
administration 46,088 11,050 102,777 26,936
Acquisition-related
costs 4,520 790 9,606 2,491
Share-based
compensation
expense 40,062 8,965 108,159 17,708
Share-based
compensation
expense related to
acquisition
milestones 23,849 8,914 81,674 11,228
Depreciation and
amortization 5,015 3,147 11,640 9,974
Operating expenses 169,693 42,562 423,028 92,703
Loss from
operations (157,241) (26,032) (402,575) (31,249)
Share of loss on
equity investments (2,089) - (9,021) (170)
Other income 235,231 44,641 63,466 41,281
Other income 233,142 44,641 54,445 41,111
Income (loss)
before income taxes 75,901 18,609 (348,130) 9,862
Income tax
(expense) recovery (1,041) (7,595) 1,398 (9,635)
11,01 (346,7
Net income (loss) $ 74,860 $ 4 $ 32) $ 227
Net income (loss)
attributable to:
Canopy Growth (349,8
Corporation $ 67,582 $ 1,583 $ 31) $ (8,809)
Non-controlling
interests 7,278 9,431 3,099 9,036
11,01 (346,7
$ 74,860 $ 4 $ 32) $ 227
Earnings (loss) per
share, basic
Net income (loss)
per share, basic: $ 0.22 $ 0.01 $ (1.45) $ (0.05)
Weighted average
number of
outstanding common 303,281,54
shares, basic: 9 182,029,481 241,806,351 171,075,324
Earnings (loss) per
share, diluted
Net income (loss)
per share, diluted: $ (0.38) $ 0.01 $ (1.45) $ (0.05)
Weighted average
number of
outstanding common 315,974,63
shares, diluted: 9 194,739,044 242,044,821 171,075,324
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2018 AND 2017
Three Months Ended Nine Months Ended
December December
UNAUDITED 31, December 31, 31, December 31,
(Expressed
in CDN
$000's) 2018 2017 2018 2017
(Restated) (Restated)
Net inflow
(outflow) of
cash related
to the
following
activities:
Operating
(346,7
Net loss $ 74,860 $ 11,014 $ 32) $ 227
Adjustments
for:
Depreciation
of property,
plant and
equipment 5,257 2,324 15,703 6,360
Amortization
of
intangible
assets 2,633 2,863 7,869 9,175
Share of
loss on
equity
investments 2,089 - 9,021 170
Fair value
changes in
biological
assets
included in
inventory
sold and
other
charges 28,105 24,204 105,989 47,836
Unrealized
gain on
changes in
fair value
of
biological
assets (22,267) (28,845) (90,500) (79,221)
Share-based
compensation 64,090 19,015 194,686 30,249
Loss on
disposal of
property,
plant and
equipment
and
intangible
assets (397) 385 1,443 553
Other assets 1,902 (5,286) (16,908) (1,932)
Other income
and expense (215,188) (40,972) (45,919) (40,972)
Income tax
(recovery)
expense 1,041 7,595 (1,398) 9,635
Non-cash
interest and
FX impact on
assets 1,804 - 1,394 -
Changes in
non-cash
operating
working
capital
items (40,692) (14,020) (129,547) (26,675)
Net cash
used in
operating
activities (96,763) (21,723) (294,899) (44,595)
Investing
Purchases
and deposits
of property,
plant and
equipment
and assets
in process (202,057) (60,581) (495,236) (86,107)
Purchases of
intangible
assets and
intangibles
in process (33,800) (751) (40,140) (1,033)
Proceeds on
disposals of
property and
equipment - - - 75
Purchases of
marketable
securities (799,418) - (802,247) (118)
Proceeds on
assets
classified
as held for
sale - - - 7,000
Investments
in
associates 15,238 (12,887) (27,201) (18,824)
Investments
in other
financial
assets (44,376) (19,020) (74,071) (27,732)
Net cash
outflow on
acquisition
of BC Tweed
NCI - - (1,000) -
Net cash
outflow on
acquisition
of Spectrum
Chile NCI 3 - (996) -
Net cash
inflow
(outflow) on
acquisition
of
subsidiaries (344,899) (3,241) (344,472) (3,600)
Net cash
used in
investing (1,409,309
activities ) (96,480) (1,785,363) (130,339)
Financing
Payment of
share issue
costs (11,798) (1,166) (18,617) (1,345)
Proceeds
from
issuance of
common
shares and
warrants 5,072,500 244,990 5,072,500 269,990
Proceeds
from
issuance of
shares by
Canopy
Rivers - - 91,218 35,113
Proceeds
from
exercise of
stock
options 15,104 4,109 28,730 7,544
Proceeds
from
exercise of
warrants 18,551 154 18,684 681
Issuance of
long-term
debt - - 600,000 -
Payment of
long-term
debt issue
costs - - (16,380) -
Repayment of
finance
lease
obligations (2,624) - (2,728) -
Repayment of
long-term
debt (2,856) (387) (3,499) (1,141)
Net cash
provided by
financing
activities 5,088,877 247,700 5,769,908 310,842
Effect of
exchange
rate changes
on cash and
cash
equivalents 103,664 - 103,664 -
Net cash
inflow 3,686,469 129,497 3,793,310 135,908
Cash and
cash
equivalents,
beginning of
period 429,401 115,494 322,560 101,800
Cash and
cash
equivalents,
end of 4,115, 4,115,
period $ 870 $ 244,991 $ 870 $ 237,708
CANOPY GROWTH CORPORATION
Adjusted
EBITDA1Non-G
AAP Measure Three Months Ended Nine Months Ended
December December
(In 31, December 31, 31, December 31,
CDN$000's) 2018 2017 2018 2017
(Restated) (Restated)
Adjusted
EBITDA1Recon
ciliation
Loss from
operations - (157, (26,03 (316,4
as reported $ 241) $ 2) $ 27) $ (31,249)
IFRS fair
value
accounting
related to
biological
assets and
inventory
Fair value
changes in
biological
assets
included in
inventory
sold and
other
charges 28,105 24,204 105,989 47,836
Unrealized
gain on
changes in
fair value
of
biological
assets (22,267) (28,845) (90,500) (79,221)
5,838 (4,641) 15,489 (31,385)
Share-based
compensation
expense (per
statement of
cash flows)2 64,090 19,015 194,686 30,249
Excess space
provision
included in
general and
administrati
on expenses (178) - 4,068 -
Acquisition
Costs 4,520 790 9,606 2,491
Depreciation
and
amortization
(per
statement of
cash flows) 7,890 5,187 23,572 15,535
76,322 24,992 231,932 48,275
Adjusted (75,0 (5,681 (69,00
EBITDA $ 81) $ ) $ 6) $ (14,359)
1 - Adjusted EBITDA is Earnings Before Interest, Tax, and
Depreciation, stock compensation, fair value changes and other
non-cash items, and as adjusted for acquisition related items.
2 - Includes $23,849 and $8,914 for the three months ended December
31, 2018 and 2017, respectively, in share-based compensation expense
related to acquisition milestones
Tyler Burns
Investor Relations, Canopy Growth Corporation
tyler.burns@canopygrowth.com
+1-855-558-9333 ex 122
Caitlin O'Hara
Communications Specialist
Caitlin.ohara@canopygrowth.com
+1-613-291-3239
Director:
Bruce Linton
tmx@tweed.com
tmx@canopygrowth.com