Achieves 37% revenue growth in FY 2021 with
strong double-digit growth across both cannabis and other consumer
products businesses
Improved supply chain execution and quality
enhancements are leading to commercial success
Maintains #1 market share1 of the
total flower category in Canada;
recently announced acquisitions further solidify Canopy's
leadership position in the Canadian recreational
market
The U.S. ecosystem strategy continues to gain
traction with focus to further capitalize on growth opportunities
in the U.S.
Remains on track to achieve positive Adjusted
EBITDA during the second half of FY 2022
SMITHS FALLS, ON, June 1, 2021 /CNW/ - Canopy Growth Corporation
("Canopy Growth" or the "Company") (TSX: WEED) (NASDAQ: CGC) today
announces its financial results for the fourth quarter and Fiscal
Year 2021 ended March 31, 2021. All financial
information in this press release is reported in Canadian dollars,
unless otherwise indicated.
"During Fiscal 2021, Canopy Growth transformed into a
CPG-modelled organization, reinforcing a foundation for sustained
growth and long-term success. By leveraging consumer insights and
innovation to deliver best-in-class products, Canopy Growth is
positioned to achieve our goal of unleashing the power of cannabis
to improve lives," said David Klein,
CEO, Canopy Growth. "We are starting to see strong momentum across
all of our key businesses and remain firmly focused on capitalizing
on U.S. opportunities in Fiscal 2022."
"We made tremendous progress improving our supply chain and
right-sizing our manufacturing footprint, bringing supply and
demand into balance," added Mike
Lee, CFO. "Our cost savings program is on track to deliver
$150-$200
million of savings within the next 18 months, and we remain
committed to our path to profitability by the end of Fiscal 2022,
while continuing to invest in an organization that is focused on
insights, innovation and gaining momentum in the U.S. market."
__________________________
|
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. Tool captures point of sale data from an average of
29% 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 ecommerce sales data from the
OCS.
|
Fourth Quarter Fiscal 2021 Financial Summary
(in millions of
Canadian dollars, unaudited)
|
Net
revenue
|
Gross margin
percentage
|
Adjusted gross
margin percentage2
|
Net
loss
|
Adjusted
EBITDA3
|
Free cash
flow4
|
Reported
|
$148.4
|
7%
|
14%
|
$(616.7)
|
$(94.0)
|
$(124.4)
|
vs. Q4
2020
|
38%
|
NM
|
(2,800)
bps
|
54%
|
8%
|
59%
|
Fiscal Year 2021 Financial Summary
(in millions of
Canadian dollars, unaudited)
|
Net
revenue
|
Gross margin
percentage
|
Adjusted gross
margin percentage5
|
Net
loss
|
Adjusted
EBITDA
|
Free cash
flow
|
Reported
|
$546.6
|
12%
|
17%
|
$(1,670.8)
|
$(340.3)
|
$(630.2)
|
vs. Fiscal
2020
|
37%
|
2,000 bps
|
(900 bps)
|
(20%)
|
23%
|
57%
|
Fourth Quarter and Full Year Fiscal 2021 Corporate Financial
Highlights
- Revenues: Net revenue of $148
million in Q4 2021 was an increase of 38% versus Q4 2020.
Net revenue increased 37% during FY 2021 over the prior year driven
by double-digit growth across Canadian cannabis, international
cannabis and other consumer products businesses. Total net cannabis
revenue of $101 million in Q4 2021
and $379 million in FY 2021,
represented an increase of 27% and 28% over Q4 2020 and the prior
year, respectively.
- Gross margin: Reported gross margin in Q4 2021 was 7% as
compared to negative 85% in Q4 2020. Adjusted gross margin,
excluding $10.3 million in
restructuring charges recorded in cost of goods sold, was 14%
compared to 42% in Q4 2020 and was negatively impacted by lower
production output, an unfavorable product mix in the Canadian
recreational market and inventory charges in part due to the
write-down of certain packaging inventory ahead of a transition to
new cannabis packaging, partially offset by payroll subsidies
received from the Canadian government in Q4 2021, pursuant to a
COVID-19 relief program. FY 2021 reported gross margin was 12%
compared to negative 8% in FY 2020. Adjusted gross margin,
excluding $26 million in
restructuring charges recorded in cost of goods sold, was 17% in FY
2021 versus 26% in FY 2020 and was impacted by lower production
output and an unfavorable product mix, partially offset by payroll
subsidies received from the Canadian government in FY 2021,
pursuant to a COVID-19 relief program.
- Operating expenses: Total SG&A ("SG&A") expenses
in Q4 2021 declined by 25% versus Q4 2020, driven by year-over-year
reductions in Sales & Marketing, and Research and Development
("R&D") expenses. SG&A expenses declined by 17% in FY 2021
compared to FY 2020 driven by a 20% reduction in Sales &
Marketing, a 22% reduction in General & Administrative
("G&A") and a 7% reduction in R&D expenses. Share-based
compensation expenses decreased 76% over Q4 2020 and 72% over FY
2020.
- Net Loss: Net loss in Q4 2021 of $617 million, a $710
million narrower loss versus Q4 2020, was driven primarily
by Other Expense totalling $367
million during Q4 2021 attributable to non-cash fair value
changes of $292 million and
impairment and restructuring charges of $75
million primarily related to changes to our Canadian
operations that were announced on December
9, 2020. The reported FY 2021 net loss of $1.7 billion, a $283
million wider loss versus FY 2020, was driven primarily by
the year-over-year change in other income (expense), net, the
reduction in the income tax recovery, and expected credit losses on
financial assets and related charges, and partially offset by the
year-over-year improvement in gross margin and reductions in
selling, general and administrative expenses, share-based
compensation expense, and asset impairment and restructuring
charges.
- Adjusted EBITDA: Adjusted EBITDA loss in Q4 2021 was
$94 million in Q4 2021, a
$8 million narrower loss versus Q4
2020 driven by higher sales and lower operating expenses. The FY
2021 Adjusted EBITDA loss of $340
million, a $102 million
narrower loss versus FY 2020 driven by higher sales and lower
operating expenses.
- Cash Position: Cash and Short-term Investments amounted
to $2.3 billion at March 31, 2021, representing an increase of
$0.3 billion from $1.98 billion at March 31,
2020 reflecting net proceeds from a $930 million (US$750
million) senior secured term loan announced on March 18, 2021, partially offset by EBITDA losses
and capital investments.
______________________________
|
2 Adjusted
gross margin is a non-GAAP measure, and for Q4 2021 excludes
restructuring costs of $10.3 million recorded in cost of goods sold
(Q4 2020 - excludes (i) restructuring and other charges of $132.1
million related to the impact of restructuring actions; and (ii)
$4.7 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".
|
5 Adjusted gross margin is a non-GAAP
measure, and for Fiscal 2021 excludes restructuring costs of $26.0
million recorded in cost of goods sold, and $1.5 million related to
the flow-through of inventory step-up associated with Fiscal 2020
business combinations (Fiscal 2020 - excludes charges of $136.8
million, as described above). See "Non-GAAP Measures".
|
Fourth Quarter and Fiscal Year 2021 Business &
Operational Highlights
- Canopy Growth continues to build momentum across its key
product lines in Canada:
-
- In Flower, the Company maintained #1 market share in the
total flower category in Canadian recreational market during Q4
2021, capturing over 19% share of the market. Twd. exited FY 2021
as the #1 flower brand in Canada,
with the brand capturing 6 out of top 10 SKUs. During Q4 2021, the
Company's premium flower brands combined to capture a leading 10.9%
share of the premium flower segment in Canada. The Company launched its first
Quebec-exclusive brand, Vert,
supported by multiple Quebec-grown
strains, Green Cush and Sour Kush, and Tweed lineage-strain named
flower products in Ontario during
Q4 2021.
- In Vapes, the Company strengthened its positioning in
the Canadian vape market with the transition to 0.5 ml 510
cartridges during Q4 2021. The addition of Ace Valley vape products
to the Company's portfolio allows Canopy to immediately capture the
#3 market share for vapes in Canada and the #1 market share for all-in-one
vapes in Q4 FY 2021.
- In Beverages, The Company launched a portfolio of THC
beverages in the Canadian recreational cannabis market during FY
2021, capturing 35% dollar share of the total beverage category
during the full year. Canopy Growth launched Quatreau CBD beverages
in Canada in Q3 2021 and captured
#1 market share in Canada since
launch. In Q1 2022, Canopy has expanded its portfolio of THC
beverages with Tweed Iced Tea beverages (available in lemon and
raspberry flavors, both with 5 mg THC) now shipping.
- In Edibles, the Company launched Twd. Strawberry gummies
in Ontario in Q4 2021 with
nationwide distribution rolling out in Q1 2022.
- The acquisition of Ace Valley and the planned acquisition of
Supreme Cannabis are expected to solidify Canopy's leadership in
the Canadian recreational market, with the pro-forma market share
of 18.1 % in Q4 2021, based on Canopy's internal market share
data.
- The U.S. business poised for significant growth with a
strong foundation in place for both CBD and non-CBD
products
-
- Canopy successfully launched a range of Martha Stewart health and wellness CBD products
in the U.S., including gummies, softgels and oils, in FY 2021.
Martha Stewart CBD products are already a top 9 brand among all CBD
supplements in the food, drug and convenience-store channel,
according to IRI data for the 4 weeks ended April 18, 2021.
- The Company launched Quatreau CBD beverages in the U.S. in Q4
2021 and became the first U.S. CBD beverage brand to sign with a
major beverage distributor, Southern Glazer's Wine &
Spirit.
- BioSteel is gaining momentum in the U.S. market, leveraging the
U.S. distribution agreements for its ready–to-drink (RTD) sports
beverages. BioSteel RTD beverages are already a top-7 sports drink
brand with only 3.6% ACV, according to the IRI data for the 13
weeks ended May 16, 2021.
- Storz & Bickel (S&B) vaporizer products concluded a
strong year with 67% revenue growth year over year driven by
expanded distribution and a strong consumer pull.
- Company on track to achieve positive Adjusted EBITDA during
the second half of FY 2022 and strengthened balance sheet provides
additional fuel for growth
-
- Implementation of supply chain optimization well underway with
network optimization and complexity reduction initiatives expected
to realize our previously stated cost savings of $150 million to $200
million by the end of the first half of FY 2023.
- Right-sizing of our Canadian production footprint has improved
cannabis supply and demand with the equivalent kilograms of
cannabis sold in Q4 2021 exceeding kilograms harvested by over
40%.
- Overall Inventory levels declined sequentially in Q4 2021 even
as finished inventory increased in support of various new product
launches.
- Canopy strengthened its balance sheet by securing a
US$750 million senior secured term
loan, with an ability to raise an additional $500 million in debt.
Fourth Quarter and Fiscal Year 2021 Financial and Operational
Review
Revenue by Channel
(in millions of
Canadian dollars, unaudited)
|
Q4
2021
|
Q4
2020
|
vs. Q4
2020
|
|
FY2021
|
FY2020
|
vs.
FY2020
|
|
|
|
|
|
|
|
|
Canadian
recreational cannabis
net
revenue
|
|
|
|
|
|
|
|
- Business to
business[6]
|
$43.3
|
$30.9
|
40%
|
|
$163.6
|
$121.6
|
35%
|
- Business to
consumer
|
$17.8
|
$13.0
|
37%
|
|
$66.0
|
$52.1
|
27%
|
|
$61.1
|
$43.9
|
39%
|
|
$229.6
|
$173.7
|
32%
|
Canadian medical
cannabis
net
revenue[7]
|
$13.7
|
$13.6
|
1%
|
|
$55.5
|
$51.6
|
8%
|
|
$74.8
|
$57.5
|
30%
|
|
$285.1
|
$225.3
|
27%
|
International and
other revenue
|
|
|
|
|
|
|
|
-
C3
|
$15.8
|
$16.2
|
(2%)
|
|
$62.3
|
$53.8
|
16%
|
- Other
|
$10.7
|
$5.8
|
84%
|
|
$31.3
|
$15.8
|
98%
|
|
$26.5
|
$22.0
|
20%
|
|
$93.6
|
$69.6
|
34%
|
Global cannabis
net revenue
|
$101.3
|
$79.5
|
27%
|
|
$378.7
|
$294.9
|
28%
|
|
|
|
|
|
|
|
|
Other consumer
products
|
|
|
|
|
|
|
|
- Storz &
Bickel
|
$17.9
|
$11.8
|
52%
|
|
$81.0
|
$48.4
|
67%
|
- This
Works
|
$8.5
|
$8.3
|
2%
|
|
$33.3
|
$24.7
|
35%
|
- Other
|
$20.7
|
$8.3
|
149%
|
|
$53.6
|
$30.8
|
74%
|
Other consumer
products
revenue
|
$47.1
|
$28.4
|
66%
|
|
$167.9
|
$103.9
|
62%
|
|
|
|
|
|
|
|
|
Net
revenue
|
$148.4
|
$107.9
|
38%
|
|
$546.6
|
$398.8
|
37%
|
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.
|
_______________________
|
6 Reflects
excise taxes of $17.5 million and other revenue adjustments of $3.1
million for Q4 2021 (Q4 2020 - $5.8 million and $5.4 million,
respectively), and excise taxes of $54.9 million and other revenue
adjustments of $14.0 million for FY2021 (FY2020 - $35.6 million and
$51.5 million, respectively).
7 Reflects excise taxes of $1.4 million for Q4 2021 (Q4
2020 - $1.3 million), and excise taxes of $5.6 million for FY2021
(FY2020 - $5.2 million).
|
Revenue by Form
(in millions of
Canadian dollars, unaudited)
|
Q4
2021
|
Q4
2020
|
vs. Q4
2020
|
|
FY2021
|
FY2020
|
vs.
FY2020
|
|
|
|
|
|
|
|
|
Canadian
recreational cannabis
|
|
|
|
|
|
|
|
- Dry
bud[8]
|
$67.9
|
$48.8
|
39%
|
|
$238.0
|
$238.1
|
-
|
- Oils
and softgels8
|
$6.7
|
$5.2
|
29%
|
|
$28.8
|
$21.6
|
33%
|
-
Beverages, edibles, topicals
and
vapes
|
$7.1
|
$1.1
|
NM
|
|
$31.7
|
$1.1
|
NM
|
- Other
revenue adjustments[9]
|
$(3.1)
|
$(5.4)
|
43%
|
|
$(14.0)
|
$(51.5)
|
73%
|
- Excise
taxes
|
$(17.5)
|
$(5.8)
|
(202%)
|
|
$(54.9)
|
$(35.6)
|
(54%)
|
|
$61.1
|
$43.9
|
39%
|
|
$229.6
|
$173.7
|
32%
|
Medical cannabis
and other
|
|
|
|
|
|
|
|
- Dry
bud
|
$9.7
|
$11.1
|
(13%)
|
|
$40.5
|
$37.4
|
8%
|
- Oils
and softgels
|
$25.5
|
$25.8
|
(1%)
|
|
$101.9
|
$89.0
|
14%
|
-
Beverages, edibles, topicals
and
vapes
|
$6.4
|
$-
|
NM
|
|
$12.3
|
$-
|
NM
|
- Excise
taxes
|
$(1.4)
|
$(1.3)
|
(8%)
|
|
$(5.6)
|
$(5.2)
|
(8%)
|
|
$40.2
|
$35.6
|
13%
|
|
$149.1
|
$121.2
|
23%
|
Global cannabis
net revenue
|
$101.3
|
$79.5
|
27%
|
|
$378.7
|
$294.9
|
28%
|
|
|
|
|
|
|
|
|
Other consumer
products
|
|
|
|
|
|
|
|
- Storz
& Bickel
|
$17.9
|
$11.8
|
52%
|
|
$81.0
|
$48.4
|
67%
|
- This
Works
|
$8.5
|
$8.3
|
2%
|
|
$33.3
|
$24.7
|
35%
|
-
Other
|
$20.7
|
$8.3
|
149%
|
|
$53.6
|
$30.8
|
74%
|
Other consumer
products revenue
|
$47.1
|
$28.4
|
66%
|
|
$167.9
|
$103.9
|
62%
|
|
|
|
|
|
|
|
|
Net
revenue
|
$148.4
|
$107.9
|
38%
|
|
$546.6
|
$398.8
|
37%
|
This table has been
recast to align with our new segment reporting.
|
Canadian Cannabis
- Recreational B2B net sales in Q4 2021 increased 40% over prior
year period due primarily to growth in the retail store network in
Canada over the fiscal year and
growth in value flower and sales of ingestible cannabis, cannabis
extracts and cannabis topical products.
- Recreational B2C net sales in Q4 2021 increased 37% versus Q4
2020 due primarily to growth in flower sales, the availability of
vape, beverage and edible products and a higher number of corporate
owned stores. The number of corporate owned stores increased over
the comparison period by 11 to 33.
- Canadian medical net revenue in Q4 2021 increased 1% from Q4
2020 driven primarily by a higher average order value in Q4
2021.
International Cannabis
- C3 revenue in Q4 2021 declined 2% year-over-year in
part due to COVID-19 restrictions that have limited sales
activities.
- Other revenue in Q4 2021 increased 84% over the prior year
period due to primarily to growth in U.S. CBD sales.
____________________________
|
8 Excludes the impact
of other revenue adjustments.
9 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
- S&B vaporizer revenue in Q4 2021 increased 52% over Q4
2020, benefitting from strengthened distribution in the U.S.,
strong consumer demand and a broader product portfolio.
- This Works sales in Q4 2021 increased 2% over Q4 2020,
benefitting from organic growth driven by e–commerce sales and
sales of the Stress Check hand sanitizer launched in the UK and
U.S. during fiscal 2021.
- Other revenue in Q4 2021 increased 149% year-over-year due
primarily to increased BioSteel sales in the U.S. that benefited
from expanded distribution.
Subsequent to Quarter-end
- Entered into a definitive agreement to acquire 100% of The
Supreme Cannabis Company, Inc. ("Supreme Cannabis"), a transaction
that combines Canopy's preeminent position with Supreme Cannabis'
Top-10 position in Canada to
create a pro forma Canadian recreational market share of 13.6%[10],
including the 7ACRES brand holding Canada's number one premium flower brand
position and Top-5 in pre-rolled joints[11]. Completion of the
acquisition of Supreme transaction is subject to approval by
Supreme Cannabis shareholders as well as certain court and
regulatory approvals.
- Acquired AV Cannabis Inc. ("Ace Valley"), a leading Cannabis
brand in Ontario with a strong
focus on ready-to-enjoy ("RTE") products and a loyal following of
millennial and Gen-Z consumers, with the intent of leveraging the
Canopy Growth's best-in-class national sales, marketing and
distribution capabilities to expand the product portfolio and scale
the brand across Canada.
The fourth quarter fiscal 2021, fourth quarter fiscal 2020, fiscal
year 2021 and fiscal year 2020 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 June 1,
2021.
Webcast Information
A live audio webcast will be available at:
https://produceredition.webcasts.com/starthere.jsp?ei=1455554&tp_key=5f1698b420
Replay Information
A replay will be accessible by webcast until 11:59 PM ET on August 30,
2021 at:
https://produceredition.webcasts.com/starthere.jsp?ei=1455554&tp_key=5f1698b420
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 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;
expected credit losses on financial assets and related charges;
restructuring and other charges 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. The Adjusted EBITDA reconciliation is
presented within this news release and explained in the Company's
Annual Report on Form 10-K to be filed with the SEC.
______________________________________
|
10 As per
the press release issued by the Company on April 8,
2021, Source: Provincial Boards; Headset Note: This market
share data differs from Canopy's internal market share data
provided during Canopy's previous earnings calls due to different
methodologies and time periods. Market share data represents
01-Oct-20 through latest available data: Provincial Board data for
ON online, PEI, NS (27/28-Mar-21) and NB (17-Mar-21); and Headset
data for ON retail (28-Feb-21) and AB, BC and SK
(31-Mar-21).
|
11 As per the press release
issued by the Company on April 8, 2021, Market share data
represents 01-Oct-20 through latest available data: Provincial
Board data for ON online, PEI, NS (27/28-Mar-21) and NB
(17-Mar-21); and Headset data for ON retail (28-Feb-21) and AB, BC
and SK (31-Mar-21).
|
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 Annual Report on Form 10-K
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 Supreme Cannabis transaction, including the timing of
closing of the Supreme Cannabis transaction and the satisfaction or
waiver of the conditions to closing the Supreme Cannabis
transaction;
- 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") by Constellation Brands, Inc. 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 in connection with the CBI
Group Investments, including proceeds to us that may result
therefrom or the potential conversion of notes held by the CBI
Group in connection with the CBI Group Investments;
- 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 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 R&D 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; 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, or self-regulatory
organizations; 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
CONSOLIDATED
BALANCE SHEETS
(in thousands of
Canadian dollars, except number of shares and per share data,
unaudited)
|
|
|
|
|
|
|
|
March 31,
2021
|
|
March 31,
2020
|
ASSETS
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$1,154,653
|
|
$1,303,176
|
Short-term
investments
|
|
1,144,563
|
|
673,323
|
Restricted short-term
investments
|
|
11,332
|
|
21,539
|
Amounts receivable,
net
|
|
92,435
|
|
90,155
|
Inventory
|
|
367,979
|
|
391,086
|
Prepaid expenses and
other assets
|
|
67,232
|
|
85,094
|
Total current
assets
|
|
2,838,194
|
|
2,564,373
|
Equity method
investments
|
|
100
|
|
65,843
|
Other financial
assets
|
|
708,167
|
|
249,253
|
Property, plant and
equipment
|
|
1,074,537
|
|
1,524,803
|
Intangible
assets
|
|
308,167
|
|
476,366
|
Goodwill
|
|
1,889,354
|
|
1,954,471
|
Other
assets
|
|
4,961
|
|
22,636
|
Total
assets
|
|
$6,823,480
|
|
$6,857,745
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$67,262
|
|
$123,393
|
Other accrued expenses
and liabilities
|
|
100,813
|
|
64,994
|
Current portion of
long-term debt
|
|
9,827
|
|
16,393
|
Other
liabilities
|
|
106,428
|
|
215,809
|
Total current
liabilities
|
|
284,330
|
|
420,589
|
Long-term
debt
|
|
1,573,136
|
|
449,022
|
Deferred income tax
liabilities
|
|
21,379
|
|
47,113
|
Liability arising
from Acreage Arrangement
|
|
600,000
|
|
250,000
|
Warrant derivative
liability
|
|
615,575
|
|
322,491
|
Other
liabilities
|
|
107,240
|
|
190,660
|
Total
liabilities
|
|
3,201,660
|
|
1,679,875
|
Commitments and
contingencies (Note 34)
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
135,300
|
|
69,750
|
Canopy Growth
Corporation shareholders' equity:
|
|
|
|
|
Common shares - $nil
par value; Authorized - unlimited number of shares;
Issued - 382,875,179
shares and 350,112,927 shares, respectively
|
|
7,168,557
|
|
6,373,544
|
Additional paid-in
capital
|
|
2,415,650
|
|
2,615,155
|
Accumulated other
comprehensive (loss) income
|
|
(34,240)
|
|
220,899
|
Deficit
|
|
(6,068,156)
|
|
(4,323,236)
|
Total Canopy Growth
Corporation shareholders' equity
|
|
3,481,811
|
|
4,886,362
|
Noncontrolling
interests
|
|
4,709
|
|
221,758
|
Total shareholders'
equity
|
|
3,486,520
|
|
5,108,120
|
Total liabilities and
shareholders' equity
|
|
$6,823,480
|
|
$6,857,745
|
Schedule 2
CANOPY GROWTH
CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands of
Canadian dollars, except number of shares and per share data,
unaudited)
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
2021
|
|
2020
|
Revenue
|
|
$167,375
|
|
$115,068
|
Excise
taxes
|
|
18,936
|
|
7,155
|
Net revenue
|
|
148,439
|
|
107,913
|
Cost of goods
sold
|
|
138,639
|
|
199,738
|
Gross
margin
|
|
9,800
|
|
(91,825)
|
Operating
expenses:
|
|
|
|
|
Selling, general and
administrative expenses
|
|
148,666
|
|
197,579
|
Share-based
compensation
|
|
18,517
|
|
78,354
|
Expected credit losses
on financial assets
and related
charges
|
|
1,000
|
|
-
|
Asset impairment and
restructuring costs
|
|
74,819
|
|
623,266
|
Total operating
expenses
|
|
243,002
|
|
899,199
|
Operating
loss
|
|
(233,202)
|
|
(991,024)
|
Loss from equity
method investments
|
|
(11,778)
|
|
(57,752)
|
Other income
(expense), net
|
|
(366,770)
|
|
(376,295)
|
Loss before income
taxes
|
|
(611,750)
|
|
(1,425,071)
|
Income tax (expense)
recovery
|
|
(4,945)
|
|
98,666
|
Net loss
|
|
(616,695)
|
|
(1,326,405)
|
Net income (loss)
attributable to noncontrolling interests and
redeemable
noncontrolling interest
|
|
83,283
|
|
(23,384)
|
Net loss attributable
to Canopy Growth Corporation
|
|
$(699,978)
|
|
$(1,303,021)
|
|
|
|
|
|
Basic and diluted
loss per share
|
|
$(1.85)
|
|
$(3.72)
|
Basic and diluted
weighted average common shares outstanding
|
|
378,519,753
|
|
349,837,102
|
Schedule 3
CANOPY GROWTH
CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands of
Canadian dollars, except number of shares and per share data,
unaudited)
|
|
|
|
|
|
|
|
Years ended
March 31,
|
|
|
2021
|
|
2020
|
Revenue
|
|
$607,198
|
|
$439,626
|
Excise
taxes
|
|
60,549
|
|
40,854
|
Net revenue
|
|
546,649
|
|
398,772
|
Cost of goods
sold
|
|
479,689
|
|
430,456
|
Gross
margin
|
|
66,960
|
|
(31,684)
|
Operating
expenses:
|
|
|
|
|
Selling, general and
administrative expenses
|
|
575,389
|
|
693,737
|
Share-based
compensation
|
|
91,149
|
|
320,276
|
Expected credit losses
on financial assets
and related
charges
|
|
109,480
|
|
-
|
Asset impairment and
restructuring costs
|
|
534,398
|
|
623,266
|
Total operating
expenses
|
|
1,310,416
|
|
1,637,279
|
Operating
loss
|
|
(1,243,456)
|
|
(1,668,963)
|
Loss from equity
method investments
|
|
(52,629)
|
|
(64,420)
|
Other income
(expense), net
|
|
(387,876)
|
|
224,329
|
Loss before income
taxes
|
|
(1,683,961)
|
|
(1,509,054)
|
Income tax
recovery
|
|
13,141
|
|
121,614
|
Net loss
|
|
(1,670,820)
|
|
(1,387,440)
|
Net income (loss)
attributable to noncontrolling interests and
redeemable
noncontrolling interest
|
|
74,100
|
|
(66,114)
|
Net loss attributable
to Canopy Growth
Corporation
|
|
$(1,744,920)
|
|
$(1,321,326)
|
|
|
|
|
|
Basic and diluted
loss per share
|
|
$(4.69)
|
|
$(3.80)
|
Basic and diluted
weighted average common
shares
outstanding
|
|
371,662,296
|
|
348,038,163
|
Schedule 4
CANOPY GROWTH
CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands of
Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
Years ended
March 31,
|
|
|
2021
|
|
2020
|
Cash flows from
operating activities:
|
|
|
|
|
Net loss
|
|
$(1,670,820)
|
|
$(1,387,440)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
70,914
|
|
73,716
|
Amortization of
intangible assets
|
|
56,204
|
|
51,297
|
Share of loss on
equity method investments
|
|
52,629
|
|
64,420
|
Share-based
compensation
|
|
91,149
|
|
320,276
|
Asset impairment and
restructuring costs
|
|
534,398
|
|
623,266
|
Expected credit losses
on financial assets and related charges
|
|
109,480
|
|
-
|
Income tax
recovery
|
|
(13,141)
|
|
(121,614)
|
Non-cash foreign
currency
|
|
8,138
|
|
(2,012)
|
Interest
paid
|
|
(25,649)
|
|
(25,472)
|
Change in operating
assets and liabilities, net of effects from purchases
of businesses:
|
|
|
|
|
Amounts
receivable
|
|
(11,994)
|
|
20,979
|
Prepaid expenses and
other assets
|
|
77
|
|
(26,917)
|
Inventory
|
|
17,211
|
|
(177,091)
|
Accounts payable and
accrued liabilities
|
|
(9,627)
|
|
(20,750)
|
Other, including
non-cash fair value adjustments
|
|
325,302
|
|
(165,293)
|
Net cash used in
operating activities
|
|
(465,729)
|
|
(772,635)
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases of and
deposits on property, plant and equipment
|
|
(164,502)
|
|
(704,944)
|
Purchases of
intangible assets
|
|
(9,639)
|
|
(16,957)
|
Proceeds on sale of
property, plant and equipment
|
|
45,921
|
|
-
|
Proceeds on sale of
intangible assets
|
|
18,337
|
|
-
|
(Purchases) redemption
of short-term investments
|
|
(459,834)
|
|
1,427,482
|
Cash outflow on
completion of RIV Arrangement
|
|
(152,801)
|
|
-
|
Sale of (investments
in) equity method investments
|
|
7,000
|
|
(5,135)
|
Investments in other
financial assets
|
|
(44,721)
|
|
(129,590)
|
Investment in Acreage
Arrangement
|
|
(49,849)
|
|
(395,190)
|
Loan advanced to
Acreage Hempco
|
|
(66,995)
|
|
-
|
Recovery of amounts
related to construction financing
|
|
10,000
|
|
-
|
Payment of acquisition
related liabilities
|
|
(16,897)
|
|
(24,482)
|
Net cash outflow on
acquisition of noncontrolling interests
|
|
(125)
|
|
-
|
Net cash outflow on
acquisition of subsidiaries
|
|
-
|
|
(498,838)
|
Net cash used in
investing activities
|
|
(884,105)
|
|
(347,654)
|
Cash flows from
financing activities:
|
|
|
|
|
Payment of share issue
costs
|
|
(131)
|
|
-
|
Proceeds from issuance
of shares by RIV Capital
|
|
1,380
|
|
1,172
|
Proceeds from exercise
of stock options
|
|
156,897
|
|
41,413
|
Proceeds from exercise
of warrants
|
|
245,186
|
|
446
|
Issuance of long-term
debt
|
|
893,160
|
|
14,761
|
Payment of debt issue
costs
|
|
(16,104)
|
|
-
|
Repayment of long-term
debt
|
|
(15,619)
|
|
(114,953)
|
Net cash provided by
(used in) financing activities
|
|
1,264,769
|
|
(57,161)
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(63,458)
|
|
(204)
|
Net decrease in cash
and cash equivalents
|
|
(148,523)
|
|
(1,177,654)
|
Cash and cash
equivalents, beginning of period
|
|
1,303,176
|
|
2,480,830
|
Cash and cash
equivalents, end of period
|
|
$1,154,653
|
|
$1,303,176
|
Schedule 5
Adjusted Gross
Margin1 Reconciliation (Non-GAAP Measure)
|
|
|
Three months ended
March 31,
|
(in thousands of
Canadian dollars except where indicated; unaudited)
|
|
2021
|
|
2020
|
Net
revenue
|
|
$148,439
|
|
$107,913
|
|
|
|
|
|
Gross margin, as
reported
|
|
9,800
|
|
(91,825)
|
Adjustments to gross
margin:
|
|
|
|
|
Restructuring
and other charges recorded in
cost of goods sold
|
|
10,348
|
|
132,089
|
Charges related
to the flow-through of inventory
step-up
on business combinations
|
|
-
|
|
4,687
|
Adjusted gross
margin1
|
|
$20,148
|
|
$44,951
|
|
|
|
|
|
Adjusted gross margin
percentage1
|
|
14%
|
|
42%
|
|
|
|
|
|
|
|
Years ended March
31,
|
(in thousands of
Canadian dollars, unaudited)
|
|
2021
|
|
2020
|
Net
revenue
|
|
$546,649
|
|
$398,772
|
|
|
|
|
|
Gross margin, as
reported
|
|
66,960
|
|
(31,684)
|
Adjustments to gross
margin:
|
|
|
|
|
Restructuring
and other charges recorded in
cost of goods sold
|
|
25,985
|
|
132,089
|
Charges related
to the flow-through of inventory
step-up
on business combinations
|
|
1,494
|
|
4,687
|
Adjusted gross
margin1
|
|
$94,439
|
|
$105,092
|
|
|
|
|
|
Adjusted gross margin
percentage1
|
|
17%
|
|
26%
|
|
|
|
|
|
1 Adjusted gross margin and adjusted
gross margin percentage are non-GAAP measures. See "Non-GAAP
Measures".
|
Schedule 6
Adjusted
EBITDA1 Reconciliation (Non-GAAP
Measure)
|
|
|
|
|
|
|
Three months ended
March 31,
|
(in thousands of
Canadian dollars, unaudited)
|
|
2021
|
|
2020
|
Net loss
|
|
$(616,695)
|
|
$(1,326,405)
|
Income tax expense
(recovery)
|
|
4,945
|
|
(98,666)
|
Other (income)
expense, net
|
|
366,770
|
|
376,295
|
Loss on equity method
investments
|
|
11,778
|
|
57,752
|
Share-based
compensation2
|
|
18,517
|
|
78,354
|
Acquisition-related
costs
|
|
5,561
|
|
1,840
|
Depreciation and
amortization2
|
|
28,928
|
|
48,781
|
Asset impairment and
restructuring costs
|
|
74,819
|
|
623,266
|
Expected credit losses
on financial assets and related
charges
|
|
1,000
|
|
-
|
Restructuring and
other charges recorded in cost of
goods sold
|
|
10,348
|
|
132,089
|
Charges related to the
flow-through of inventory
step-up
on business combinations
|
|
-
|
|
4,687
|
Adjusted
EBITDA1
|
|
$(94,029)
|
|
$(102,007)
|
|
|
Years ended March
31,
|
(in thousands of
Canadian dollars, unaudited)
|
|
2021
|
|
2020
|
Net loss
|
|
$(1,670,820)
|
|
$(1,387,440)
|
Income tax
recovery
|
|
(13,141)
|
|
(121,614)
|
Other (income)
expense, net
|
|
387,876
|
|
(224,329)
|
Loss on equity method
investments
|
|
52,629
|
|
64,420
|
Share-based
compensation2
|
|
91,149
|
|
320,276
|
Acquisition-related
costs
|
|
13,522
|
|
20,840
|
Depreciation and
amortization2
|
|
127,118
|
|
125,013
|
Asset impairment and
restructuring costs
|
|
534,398
|
|
623,266
|
Expected credit losses
on financial assets and related
charges
|
|
109,480
|
|
-
|
Restructuring and
other charges recorded in cost of
goods sold
|
|
25,985
|
|
132,089
|
Charges related to the
flow-through of inventory
step-up
on business combinations
|
|
1,494
|
|
4,687
|
Adjusted
EBITDA1
|
|
$(340,310)
|
|
$(442,792)
|
|
|
|
|
|
1Adjusted
EBITDA is a non-GAAP measure. See "Non-GAAP Measures".
|
2 From
Consolidated Statements of Cash Flows.
|
|
|
|
|
Schedule 7
Free Cash
Flow1 Reconciliation (Non-GAAP Measure)
|
|
|
|
|
|
|
Three months ended
March 31,
|
(in thousands of
Canadian dollars, unaudited)
|
|
2021
|
|
2020
|
Net cash used in
operating activities
|
|
$(97,830)
|
|
$(210,639)
|
Purchases of and
deposits on property, plant and equipment
|
|
(26,525)
|
|
(94,086)
|
Free cash
flow1
|
|
$(124,355)
|
|
$(304,725)
|
|
|
Years ended March
31,
|
(in thousands of
Canadian dollars, unaudited)
|
|
2021
|
|
2020
|
Net cash used in
operating activities
|
|
$(465,729)
|
|
$(772,635)
|
Purchases of and
deposits on property, plant and equipment
|
|
(164,502)
|
|
(704,944)
|
Free cash
flow1
|
|
$(630,231)
|
|
$(1,477,579)
|
|
|
|
|
|
1Free cash
flow is a non-GAAP measure. See "Non-GAAP Measures".
|
Schedule 8
Segmented Revenue
by Channel
|
|
Three months
ended
|
(in thousands of
Canadian dollars, unaudited)
|
|
December 31,
2020
|
|
September 30,
2020
|
|
June 30,
2020
|
Canadian recreational
cannabis net revenue
|
|
|
|
|
|
|
Business-to-business1
|
|
$43,129
|
|
$42,223
|
|
$34,934
|
Business-to-consumer
|
|
20,224
|
|
18,709
|
|
9,330
|
|
|
63,353
|
|
60,932
|
|
44,264
|
Canadian medical
cannabis net revenue2
|
|
13,947
|
|
13,888
|
|
13,910
|
|
|
77,300
|
|
74,820
|
|
58,174
|
International and
other revenue
|
|
|
|
|
|
|
C3
|
|
17,642
|
|
13,556
|
|
15,369
|
Other
|
|
8,886
|
|
5,918
|
|
5,739
|
|
|
26,528
|
|
19,474
|
|
21,108
|
Global cannabis net
revenue
|
|
103,828
|
|
94,294
|
|
79,282
|
|
|
|
|
|
|
|
Other consumer
products
|
|
|
|
|
|
|
Storz &
Bickel
|
|
24,147
|
|
21,836
|
|
17,120
|
This Works
|
|
10,907
|
|
7,833
|
|
6,049
|
Other
|
|
13,646
|
|
11,303
|
|
7,965
|
Other consumer
products revenue
|
|
48,700
|
|
40,972
|
|
31,134
|
Net
revenue
|
|
$152,528
|
|
$135,266
|
|
$110,416
|
|
|
|
|
|
|
|
1 Reflects excise taxes of $15,977
and other revenue adjustments, representing our determination of
returns and pricing adjustments, of $3,750 for the three months
ended December 31, 2020; excise taxes of $14,200 and other revenue
adjustments of $3,750 for the three months ended September 30,
2020; and excise taxes of $7,246 and other revenue adjustments of
$3,400 for the three months ended June 30, 2020.
|
2 Reflects excise taxes of
$1,402 for the three months ended December 31, 2020; $1,362 for the
three months ended September 30, 2020; and $1,426 for the three
months ended June 30, 2020.
|
Schedule 9
Segmented Revenue
by Form
|
|
Three months
ended
|
(in thousands of
Canadian dollars, unaudited)
|
|
December 31,
2020
|
|
September 30,
2020
|
|
June 30,
2020
|
Canadian recreational
cannabis
|
|
|
|
|
|
|
Dry
bud1
|
|
$66,210
|
|
$63,895
|
|
$40,129
|
Oils and
softgels1
|
|
7,292
|
|
7,021
|
|
7,721
|
Beverages, edibles,
topicals and vapes
|
|
9,578
|
|
7,966
|
|
7,060
|
Other revenue
adjustments
|
|
(3,750)
|
|
(3,750)
|
|
(3,400)
|
Excise
taxes
|
|
(15,977)
|
|
(14,200)
|
|
(7,246)
|
|
|
63,353
|
|
60,932
|
|
44,264
|
Medical cannabis and
other
|
|
|
|
|
|
|
Dry bud
|
|
10,098
|
|
9,836
|
|
10,832
|
Oils and
softgels
|
|
27,696
|
|
23,458
|
|
25,215
|
Beverages, edibles,
topicals and vapes
|
|
4,083
|
|
1,430
|
|
397
|
Excise
taxes
|
|
(1,402)
|
|
(1,362)
|
|
(1,426)
|
|
|
40,475
|
|
33,362
|
|
35,018
|
Global cannabis net
revenue
|
|
103,828
|
|
94,294
|
|
79,282
|
|
|
|
|
|
|
|
Other consumer
products
|
|
|
|
|
|
|
Storz &
Bickel
|
|
24,147
|
|
21,836
|
|
17,120
|
This Works
|
|
10,907
|
|
7,833
|
|
6,049
|
Other
|
|
13,646
|
|
11,303
|
|
7,965
|
Other consumer
products revenue
|
|
48,700
|
|
40,972
|
|
31,134
|
Net
revenue
|
|
$152,528
|
|
$135,266
|
|
$110,416
|
|
|
|
|
|
|
|
1 Excludes the impact of other
revenue adjustments.
|
Schedule 10 – Segmented Gross Margin Reconciliation
|
|
Three months
ended
|
(in thousands of
Canadian dollars except where indicated; unaudited)
|
December 31,
2020
|
|
September 30,
2020
|
|
June 30,
2020
|
Global cannabis
segment
|
|
|
|
|
|
|
Net revenue
|
|
$103,828
|
|
$94,294
|
|
$79,282
|
Cost of goods
sold
|
|
96,434
|
|
82,232
|
|
86,140
|
Gross
margin
|
|
7,394
|
|
12,062
|
|
(6,858)
|
Gross margin
percentage
|
|
7%
|
|
13%
|
|
(9%)
|
|
|
|
|
|
|
|
Other consumer
products segment
|
|
|
|
|
|
|
Revenue
|
|
$48,700
|
|
$40,972
|
|
$31,134
|
Cost of goods
sold
|
|
31,509
|
|
26,954
|
|
17,781
|
Gross
margin
|
|
17,191
|
|
14,018
|
|
13,353
|
Gross margin
percentage
|
|
35%
|
|
34%
|
|
43%
|
Schedule 11 – Segmented Adjusted Gross Margin Reconciliation
(Non-GAAP Measure)
|
|
Three months
ended
|
(in thousands of
Canadian dollars except where indicated;
unaudited)
|
December 31,
2020
|
|
September 30,
2020
|
|
June 30,
2020
|
Global cannabis
segment
|
|
|
|
|
|
|
Net
revenue
|
|
$103,828
|
|
$94,294
|
|
$79,282
|
|
|
|
|
|
|
|
Gross margin, as
reported
|
|
7,394
|
|
12,062
|
|
(6,858)
|
Adjustments to gross
margin:
|
|
|
|
|
|
|
Restructuring and
other charges recorded
in cost of goods
sold
|
|
15,637
|
|
-
|
|
-
|
Adjusted gross
margin1
|
|
$23,031
|
|
$12,062
|
|
$(6,858)
|
|
|
|
|
|
|
|
Adjusted gross margin
percentage1
|
|
22%
|
|
13%
|
|
(9%)
|
|
|
|
|
|
|
|
Other consumer
products segment
|
|
|
|
|
|
|
Revenue
|
|
$48,700
|
|
$40,972
|
|
$31,134
|
|
|
|
|
|
|
|
Gross margin, as
reported
|
|
17,191
|
|
14,018
|
|
13,353
|
Adjustments to gross
margin:
|
|
|
|
|
|
|
Charges related to the
flow-through of inventory
step-up
on business combinations
|
|
-
|
|
-
|
|
1,213
|
Adjusted gross
margin1
|
|
$17,191
|
|
$14,018
|
|
$14,566
|
|
|
|
|
|
|
|
Adjusted gross margin
percentage1
|
|
35%
|
|
34%
|
|
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