Strategic adjustments are expected to generate
savings of $100 – $150 million within 12 – 18 months
SMITHS
FALLS, ON, April 26, 2022 /CNW/ - Canopy Growth
Corporation ("Canopy Growth" or "the Company") (TSX: WEED)
(NASDAQ: CGC), a world-leading diversified cannabis, hemp, and
cannabis device company, today announced that the Company is
undertaking a series of initiatives to reduce costs and drive
efficiency in order to accelerate its path to profitability. All
financial information in this press release is reported in Canadian
dollars, unless otherwise indicated.
Aligned to Canopy Growth's FY23 strategic review, the Company is
conducting the following actions:
- Reducing cost of goods sold ("COGS") in the Company's Canadian
cannabis business by lowering per-gram cultivation costs through
increased cultivation-related efficiencies and facility
improvements;
- Implementing a flexible manufacturing platform inclusive of
contract manufacturing for certain product formats;
- Rightsizing indirect costs and generating efficiencies across
the Company's supply chain and procurement;
- Aligning selling, general and administrative costs ("SG&A")
with short-term business expectations by reducing third-party
professional fees and office costs; and
- Further streamlining the organization to drive process-related
efficiencies.
As a result of these challenging but necessary changes to the
organizational structure, dedicated team members will be impacted
as the Company operates with a reduced headcount moving forward.
The Canopy Management team wishes to acknowledge the efforts of
these individuals during their tenure and thanks them for their
contributions to the Company.
"To realize profitability and power growth, we are taking
critical actions to further evolve Canopy Growth into an agile
organization with a clear focus on the areas where we have the
greatest potential of success," said David
Klein, Canopy Growth Chief Executive Officer. "These
necessary changes are being implemented to ensure the size and
scale of our operations reflect current market realities and will
support the long-term sustainability of our company."
"The savings and operational efficiencies generated through
these additional steps reinforce our commitment to driving Canopy
to profitability," shared Judy Hong,
Canopy Growth's Chief Financial Officer. "Achieving profitability
in our Canadian business is critical to the success of our Company
and will ensure we can continue investing in our key strategic
growth areas including US THC to build significant long-term
value."
Management expects to generate COGS savings of $30 - $50 million
and reduce SG&A expenses by $70 - $100 million within
12 - 18 months. These savings are incremental to the previously
announced cost savings of $150-$200 million,
of which the majority have already been achieved. As a result of
these strategic changes, management anticipates charges between
$250 - $300
million in Q4 FY2022, the majority of which will be non-cash
and relate to the write-down of excess inventory balances as well
as "property, plant and equipment" impairments. Further, the
Company expects to incur between $100
- $250 million in non-cash impairment
charges in Q4 FY2022, largely driven by goodwill and intangible
asset impairments.
All figures reported above with respect to the quarter ended
March 31, 2022 are preliminary, are
based on current expectations and are unaudited and subject to
change and adjustment as the Company prepares its consolidated
financial statements for the fiscal year ended March 31, 2022. Actual results may differ
materially from the preliminary estimates herein. Accordingly,
investors are cautioned not to place undue reliance on the
foregoing information. The Company does not intend to provide
preliminary results in the future. The preliminary results provided
in this news release constitute "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995 and "forward-looking information" within the
meaning of applicable Canadian securities legislation, are based on
several assumptions and are subject to a number of risks and
uncertainties. See "Notice Regarding Forward Looking
Statements".
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 hemp-derived 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
Information
This press release contains "forward-looking statements" and
"forward-looking information" within the meaning of applicable U.S.
and Canadian securities laws (collectively, "forward-looking
statements"), 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 and include
statements relating to the Company's estimated cost savings
opportunities and the estimated pre-tax charges the Company expects
to take as further described herein. 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 are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by management, are
inherently subject to significant business, economic and
competitive risks, financial results, results, performance or
achievements expressed or implied by those forward-looking
statements and the forward-looking statements are not guarantees of
future performance. Accordingly, there are or will be important
factors that could cause actual outcomes or results to differ
materially from those indicated in these statements. A discussion
of some of the material factors applicable to Canopy Growth
Corporation ("Canopy") can be found under the section entitled
"Risk Factors" in Canopy's Annual Report on Form 10-K for the year
ended March 31, 2021, filed with the
Securities and Exchange Commission and with applicable Canadian
securities regulators, as such factors may be further updated from
time to time in its periodic filings with the Securities and
Exchange Commission and with applicable Canadian securities
regulators, which can be accessed
at www.sec.gov/edgar and www.sedar.com,
respectively. These factors should not be construed as exhaustive
and should be read in conjunction with the other cautionary
statements that are included in this press release and in the
filings. Any forward-looking statement included in this press
release is made as of the date of this press release and, except as
required by law, Canopy disclaims any obligation to update or
revise any forward- looking statement. Readers are cautioned not to
put undue reliance on any forward-looking statement.
Forward-looking statements contained in this press release are
expressly qualified by this cautionary statement.
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SOURCE Canopy Growth Corporation