SMITHS
FALLS, ON, Nov. 9, 2022 /PRNewswire/ - Canopy Growth
Corporation ("Canopy Growth" or the "Company") (TSX: WEED) (NASDAQ:
CGC) today announces its financial results for the second quarter
ended September 30, 2022. All
financial information in this press release is reported in Canadian
dollars, unless otherwise indicated.
Highlights
- Announced comprehensive plan to fast track entry into the U.S.
cannabis market through the creation of a new U.S. domiciled
holding company, Canopy USA, LLC
("Canopy USA"), which is expected
to accelerate growth and market expansion.
- In respect of the acquisition of Acreage Holdings, Inc.
("Acreage"), the 30-day HSR waiting period has expired.
- Delivered net revenue growth of 7% in Q2 FY2023 relative to Q1
FY2023, despite the continued impacts of macroeconomic headwinds
and evolving Canadian cannabis market dynamics.
- Achieved 299% net revenue increase for BioSteel as compared to
the prior year, driven by increased investment. Acquired
manufacturing facility subsequent to quarter end, which is expected
to support ongoing rapid U.S. expansion for the brand and drive
gross margin improvement.
- Increased Canadian medical cannabis revenues by 8% versus Q2
FY2022 through continued focus on expansion of product offerings.
Stabilized revenues in Canadian adult-use and saw market share
growth across key brands including Doja, Tweed, and Deep Space
compared to the prior quarter.
- Announced divestiture of Canadian retail operations, ensuring
cost reduction program remains on track to deliver $70-$100 million in
Selling, General & Administrative ("SG&A") savings. In
addition, the Company continues to assess opportunities to focus
the Company's Canadian cannabis operations.
"Our second quarter marks a key inflection-point for Canopy,
demonstrating momentum across our key businesses and accelerating
our entry into the U.S. cannabis market through the creation of
Canopy USA. Canopy is ideally
positioned to capitalize on this once-in-a-generation opportunity
and accelerate our path to North American cannabis market
leadership."
David Klein, Chief Executive
Officer
"We delivered solid sequential quarterly net revenue growth and
improved margins, led by another record quarter for BioSteel, the
stabilization of our Canadian cannabis business, and continued
actions to reduce overall costs. We are pressing forward on our
path to profitability in Canada
and expect Canopy USA will
meaningfully enhance our growth and profitability over time once it
closes the announced acquisitions of Acreage, Jetty, and Wana."
Judy Hong, Chief Financial
Officer
Second Quarter Fiscal 2023 Financial Summary
(in millions of Canadian
dollars, unaudited)
|
|
Net Revenue
|
Gross margin
percentage
|
Adjusted
gross margin
percentage1
|
Net loss
|
Adjusted
EBITDA2
|
Free cash
flow3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
$117.9
|
3 %
|
10 %
|
$(231.9)
|
$(78.1)
|
$(135.4)
|
vs. Q2
FY2022
|
|
(10 %)
|
5,700 bps
|
6,200 bps
|
(1,320 %)
|
52 %
|
(34 %)
|
Revenues:
Net revenue of $118 million in Q2
FY2023 declined 10% versus Q2 FY2022. The decrease is primarily
attributable to increased competition in the Canadian adult-use
cannabis market, the divestiture of C³ Cannabinoid Compound Company
GmbH ("C3"), and softer performance from This Works,
offset by revenue growth at BioSteel. Excluding the impact from the
divestiture of C3, net revenue declined 1% versus Q2
FY2022. When adjusting for both the impact of C3 and the
ongoing divestiture of our Canadian retail business, revenues for
the period increased 2% versus Q2 FY2022. Net revenue
increased 7% in Q2 FY2023 relative to Q1 FY2023, despite the
continued impacts of macroeconomic headwinds and evolving Canadian
cannabis market dynamics.
Gross margin1:
Reported gross margin in Q2 FY2023 was 3% as compared to (54%)
in Q2 FY2022. Excluding non-cash restructuring costs recorded in
cost of goods sold of $8 million,
adjusted gross margin was 10%. Gross margin in Q2 FY2023 was
impacted by lower production output and price compression in the
Canadian adult-use cannabis business, the divesture of
C3, and a decrease in the amount of payroll subsidies
received from the Canadian government pursuant to a COVID-19 relief
program.
Operating expenses:
Total SG&A expenses in Q2 FY2023 were flat versus Q2 FY2022,
driven by year-over-year reductions in General & Administrative
("G&A") and Research & Development ("R&D") expenses,
offset by increases in Acquisition-Related Costs and Sales and
Marketing expenses. The increase in Sales and Marketing expenses
was primarily driven by the investment in the BioSteel NHL
partnership announced in July 2022.
Net Loss:
Net Loss in Q2 FY2023 was $232
million, which is a $216
million increase in the net loss versus Q2 FY2022, driven
primarily by non- cash fair value changes and an increase in asset
impairment and restructuring costs, partially offset by improved
margins.
Adjusted EBITDA2:
Adjusted EBITDA loss in Q2 FY2023 was $78
million, an $85 million
improvement in Adjusted EBITDA loss versus Q2 FY2022 due to the
improvement in gross margin and reductions in G&A and R&D
expenses.
Free Cash Flow3:
Free Cash Flow in Q2 FY2023 was an outflow of $135 million, a 34% increase in outflow versus Q2
FY2022. Relative to Q2 FY2022, the outflow increase is due to the
timing of certain payments in each period. Year-to-date Free
Cash Flow in FY2023 is in line with the prior year period.
Cash Position:
Cash and short-term investments amounted to $1,143 million at September 30, 2022, representing a decrease of
$229 million from $1,372 million at March 31, 2022 reflecting primarily Adjusted
EBITDA losses and interest costs.
1 Adjusted
gross margin is a non-GAAP measure, and for Q2 FY2023 excludes $8.0
million of restructuring costs recorded in cost of goods sold (Q2
FY2022 - excludes $3.1 million related to the flow-through of
inventory step-up associated with the acquisition of Supreme
Cannabis and $nil of restructuring costs recorded in cost of goods
sold). See "Non-GAAP Measures".
2 Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP
Measures".
3 Free cash flow is a non-GAAP measure. See "Non-GAAP
Measures".
|
Business Highlights
Canadian cannabis business proved resilient with
stabilized revenue in adult-use cannabis, benefiting from
mainstream and premium flower innovation and growth in medical
cannabis
- Canadian medical cannabis net revenue increased 8% versus Q2
FY2022 driven by growth in patient registrations and continued
expansion of product offerings.
- Doja, premium flower and pre-rolled joint brand, increased
market share by 2 bps versus Q1 FY2023 to 2.4%4.
Mainstream brands Tweed and Vert increased market share by 10
bps and 13 bps, respectively, versus Q1 FY2023. Deep Space
beverages increased market share by 67 bps versus Q1 FY2023 to
11.5%.
- High'er Education, the Company's budtender engagement program,
has facilitated over 10,000 budtender interactions in its first
year. The programming focuses primarily on education and product
knowledge to drive budtender recommendations.
Gains in distribution and sales velocity of BioSteel RTD
drove record revenue in Q2 FY2023
- BioSteel revenue in Q2 FY2023 increased 299% versus Q2 FY2022
with BioSteel Ready-to-Drink ("RTD") beverages achieving 34% All
Commodity Volume, ("ACV")5 in the U.S., up from 6.5% in
Q2 FY2022. Year-to-date in FY2023, BioSteel has secured
distribution with, among others, Walmart, Rite Aid, and
Winn Dixie.
- BioSteel signed a multi-year partnership with the National
Hockey League and the National Hockey League Players Association as
the Official Hydration Partner. This partnership provides BioSteel
with league-wide rink side marketing and product supply rights,
retail activation rights, and a community engagement platform.
- On November 8, 2022, the Company
acquired a manufacturing facility, which is expected to support
ongoing rapid U.S. expansion for the brand and drive gross margin
improvement.
4 Unless
otherwise indicated, market share data disclosed in this press
release is calculated using the Company's internal proprietary
market share tool that utilizes point of sales data supplied by
third-party data providers, government agencies and our own retail
store operations across the country.
|
5 IRI data
for the 13 weeks ended October 2, 2022.
|
Canopy USA is expected to
fast track entry into the U.S. cannabis market and create a truly
North American cannabis brand powerhouse while accelerating Canopy
Growth's path to profitability
- Canopy Growth has established Canopy USA – a new U.S.-domiciled holding company,
which now holds the Company's U.S. cannabis investments. This
structure will enable Canopy USA
to acquire each of Acreage, Jetty, and Wana and capitalize on the
market opportunity presented by the U.S. cannabis market. The
strategy and positioning of Canopy USA are true differentiators and will unlock
potential expansion opportunities presented by the scalable and
ideally-positioned U.S. cannabis ecosystem, positioning Canopy for
profitable growth.
- Acreage6 continued to make strong progress in the
third quarter of calendar 2022 with revenue increasing 28% year
over year and delivering their 7th consecutive quarter of positive
Adjusted EBITDA7 (as calculated by Acreage and set forth
in Acreage's Third Quarter 2022 Financial Results press release
available under Acreage's profile on SEDAR at www.sedar.com and
through EDGAR at www.sec.gov/edgar). Acreage Superflux Margalope
Live Resin Vape Cartridge was awarded the Best Vape Pens category
at the High Times Cannabis Cup in Illinois. Subsequent to the end of the
quarter, Acreage's social equity joint venture in Connecticut was approved for both a
Disproportionately Impacted Area Cultivation License and Adult-Use
Cannabis Retail License.
- During the third quarter of calendar 2022, Jetty8
strengthened its product portfolio with the launch of half gram
solventless vape cartridges and the company's solventless
extraction process received certification under the state of
California's OCal Program, which
certifies that the cannabis products have been grown and
manufactured under "comparable-to-organic" standards. From July to
August 2022, Jetty solventless vape
retail sales increased by 30%9. Jetty also received
multiple High Times SoCal awards in July
2022 including 2nd Place Concentrates for its Super Lemon
Haze Live and 3rd Place Vape for its Banana Punch Solventless Vape
Cartridge.
- Wana10 has continued to grow its North American
footprint, launching products in Montana and onboarding in additional states.
Continuing its portfolio expansion, Wana introduced a range of new
SKUs in the states where it operates including launching Wana's
Optimals Fast Asleep in Nevada and
Michigan. Wana's CEO Nancy
Whiteman also received the Benzinga Lifetime Achievement Award for
her contributions to developing the cannabis industry in the
U.S.
- In order to execute on its announced plan with Canopy
USA, Canopy Growth requires
shareholder approval for the creation and issuance of a new class
of exchangeable shares in the capital of the Company. In connection
with the proposal to amend the Company's articles in order to
create the exchangeable shares, Canopy Growth filed a preliminary
proxy statement with the Securities and Exchange Commission ("SEC")
on October 25, 2022. Once the SEC
completes its review of the preliminary proxy statement, a
definitive proxy statement and a form of proxy will be filed with
the SEC and mailed or otherwise furnished to Canopy Growth
shareholders.
6 Until such
time as the rights to acquire Acreage is exercised, Canopy USA will
have no direct or indirect economic or voting interests in Acreage,
Canopy USA will not directly or indirectly control Acreage, and
Canopy USA, on the one hand, and Acreage, on the other hand, will
continue to operate independently of one another. The Company holds
non-voting and non-participating shares in Canopy USA that are
exchangeable into common shares of Canopy USA.
7 Canopy Growth and Acreage may calculate Adjusted
EBITDA differently as Adjusted EBITDA does not have any
standardized meaning and therefore may not be comparable as between
the Company and Acreage.
8 Until such time as Canopy USA elects to exercise its
rights to acquire Jetty, Canopy USA will have no direct or indirect
economic or voting interests in Jetty, Canopy USA will not directly
or indirectly control Jetty, and Canopy USA, on the one hand, and
Jetty, on the other hand, will continue to operate independently of
one another. The Company holds non-voting and
non-participating shares in Canopy USA that are exchangeable into
common shares of Canopy USA.
9 Based on August 2022 BDSA data for dollars sold.
10 Until such time as Canopy USA elects to exercise its
rights to acquire Wana, Canopy USA will have no direct or indirect
economic or voting interests in Wana, Canopy USA will not directly
or indirectly control Wana, and Canopy USA, on the one hand, and
Wana, on the other hand, will continue to operate independently of
one another. The Company holds non-voting and
non-participating shares in Canopy USA that are exchangeable into
common shares of Canopy USA.
|
Second Quarter Fiscal 2023 Revenue
Review11
Revenue by Channel
(in millions of
Canadian dollars, unaudited)
|
|
Q2
FY2023
|
Q2
FY2022
|
Vs. Q2
FY2022
|
Canada
cannabis
|
|
|
|
|
Canadian
recreational cannabis
|
|
|
|
|
Business-to-business12
|
|
$25.3
|
$41.9
|
(40 %)
|
Business-to-consumer
|
|
$12.8
|
$16.7
|
(23 %)
|
|
|
$38.1
|
$58.6
|
(35 %)
|
Canadian medical
cannabis13
|
|
$14.2
|
$13.1
|
8 %
|
|
|
$52.3
|
$71.7
|
(27 %)
|
Rest-of-world
cannabis
|
|
|
|
|
C3
|
|
$-
|
$11.9
|
(100 %)
|
Other rest-of-world
cannabis14
|
|
$10.6
|
$11.7
|
(9 %)
|
|
|
$10.6
|
$23.6
|
(55 %)
|
|
|
|
|
|
Storz &
Bickel
|
|
$13.5
|
$14.5
|
(7 %)
|
BioSteel15
|
|
$29.9
|
$7.5
|
299 %
|
This
Works
|
|
$6.9
|
$9.1
|
(24 %)
|
Other
|
|
$4.7
|
$5.0
|
(6 %)
|
|
|
|
|
|
Net
revenue
|
|
$117.9
|
$131.4
|
(10 %)
|
11 In Q2
FY23, we are reporting our financial results for the following five
reportable segments: (i) Canada cannabis; (ii) rest-of-world
cannabis; (iii) Storz & Bickel; (iv) BioSteel; and (v) This
Works. Information regarding segment net revenue and segment gross
margin for the comparative periods has been restated to reflect the
aforementioned change in reportable segments.
12 For Q2 FY2023, amount is net of excise taxes of $11.4
million and other revenue adjustments of $0.4 million (Q2 FY2022 -
$12.9 million and $nil, respectively).
13 For Q2 FY2023, amount is net of excise taxes of $1.1
million (Q2 FY2022 - $1.4 million).
14 For Q2 FY2023, amount reflects other revenue
adjustments of $0.5 million (Q2 FY2022 - $0.6 million).
15 For Q2 FY2023, amount reflects other revenue
adjustments of $2.7 million (Q2 FY2022 - $2.7 million).
|
Revenue by Form
(in millions of
Canadian dollars, unaudited)
|
|
Q2
FY2023
|
Q2
FY2022
|
Vs. Q2
FY2022
|
Canada
cannabis
|
|
|
|
|
Dry
bud16,17
|
|
$43.2
|
$62.0
|
(30 %)
|
Oils and
softgels16,17
|
|
$11.9
|
$13.4
|
(11 %)
|
Beverages, edibles,
topicals and vapes16,17
|
|
$10.1
|
$10.6
|
(5 %)
|
Other revenue
adjustments17
|
|
$(0.4)
|
$-
|
(100 %)
|
Excise taxes
|
|
$(12.5)
|
$(14.3)
|
13 %
|
|
|
$52.3
|
$71.7
|
(27 %)
|
Rest-of-world
cannabis18
|
|
|
|
|
Dry bud
|
|
$6.7
|
$4.0
|
68 %
|
Oils and soft
gels
|
|
$2.4
|
$12.8
|
(81 %)
|
Beverages, edibles,
topicals and vapes
|
|
$1.5
|
$6.8
|
(78 %)
|
|
|
$10.6
|
$23.6
|
(55 %)
|
|
|
|
|
|
Storz &
Bickel
|
|
$13.5
|
$14.5
|
(7 %)
|
BioSteel18
|
|
$29.9
|
$7.5
|
299 %
|
This
Works
|
|
$6.9
|
$9.1
|
(24 %)
|
Other
|
|
$4.7
|
$5.0
|
(6 %)
|
|
|
|
|
|
Net
revenue
|
|
$117.9
|
$131.4
|
(10 %)
|
Canada Cannabis
- Recreational B2B net revenue in Q2 FY2023 decreased 40% over
the prior year period driven primarily by lower sales volumes,
particularly in value-priced dried flower, resulting from both the
strategic shift in our product portfolio and increased competition.
These factors were partially offset by a more favourable product
mix.
- Recreational B2C net revenue in Q2 FY2023 decreased 23% versus
Q2 FY2022 largely driven by increased competition from the rapid
growth in third party retail locations across provinces.
- Medical net revenue in Q2 FY2023 increased 8% from Q2 FY2022
driven by larger average order sizes.
Rest-of-world Cannabis
- Rest-of-world Cannabis revenue in Q2 FY2023 decreased 55% over
Q2 FY2022 due primarily to the divestiture of C3 and a
decline in our U.S. CBD business.
- Excluding the impact of the divestiture of C3,
Rest-of-world Cannabis net revenue decreased 9% as compared to Q2
FY2022.
Storz & Bickel
- Storz & Bickel vaporizer revenue in Q2 FY2023 decreased 7%
over Q2 FY2022 due primarily to continued slowdown in consumer
spending, temporary disruptions with certain distributors, and the
impact of foreign exchange rates.
BioSteel
- BioSteel sales in Q2 FY2023 increased 299% over Q2 FY2022 due
to continued growth in our distribution channels and sales
velocities across North America
and higher international sales.
This Works
- This Works sales in Q2 FY2023 decreased 24% over Q2 FY2022 due
in part to softer performance of certain product lines and the
impact of foreign exchange rates.
The Q2 FY2023 and Q2 FY2022 financial results presented in this
press release have been prepared in accordance with U.S. GAAP.
16 Excludes
the impact of other revenue adjustments.
|
17 Other
revenue adjustments represent the Company's determination of
returns and pricing adjustments and relate to the Canadian
recreational business‐to‐business channel.
|
18 Includes
the impact of other revenue adjustments, which represent the
Company's determination of returns and other pricing
adjustments.
|
Webcast and Conference Call Information
The Company will host a conference call and audio webcast with
David Klein, CEO and Judy Hong, CFO at 10:00
AM Eastern Time on November 9,
2022.
Webcast Information
A live audio webcast will be available at
https://app.webinar.net/nwPeJ3EBZG8
Replay Information
A replay will be accessible by webcast until 11:59 PM Eastern Time on February 7, 2023 at
https://app.webinar.net/nwPeJ3EBZG8
Non-GAAP Measures
Adjusted EBITDA is a non-GAAP measure used by management that is
not defined by U.S. GAAP and may not be comparable to similar
measures presented by other companies. Adjusted EBITDA is
calculated as the reported net income (loss), adjusted to exclude
income tax recovery (expense); other income (expense), net; loss on
equity method investments; share-based compensation expense;
depreciation and amortization expense; asset impairment and
restructuring costs; restructuring costs recorded in cost of goods
sold; and charges related to the flow-through of inventory step-up
on business combinations, and further adjusted to remove
acquisition-related costs. Asset impairments related to periodic
changes to the Company's supply chain processes are not excluded
from Adjusted EBITDA given their occurrence through the normal
course of core operational activities. The Adjusted EBITDA
reconciliation is presented within this news release and explained
in the Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2022 (the
"Form 10-Q") to be filed with the SEC.
Free Cash Flow is a non- GAAP measure used by management that is
not defined by U.S. GAAP and may not be comparable to similar
measures presented by other companies. This measure is calculated
as net cash provided by (used in) operating activities less
purchases of and deposits on property, plant and equipment. The
Free Cash Flow reconciliation is presented within this news release
and explained in the Form 10-Q.
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 and explained
in the Company's Quarterly Report on Form 10-Q to be filed with the
SEC.
.About Canopy Growth Corporation
Canopy Growth Corporation ("Canopy") is a leading North American
cannabis and CPG company dedicated to unleashing the power of
cannabis to improve lives.
Through an unwavering commitment to our consumers, Canopy
delivers innovative products with a focus on premium and mainstream
cannabis brands including Doja, 7ACRES, Tweed, and Deep Space. Our
CPG portfolio features sugar-free sports hydration brand BioSteel,
targeted 24-hour skincare and wellness solutions from This Works,
gourmet wellness products by Martha Stewart CBD, and category
defining vaporizer technology made in Germany by Storz & Bickel.
Canopy has also established a comprehensive ecosystem to realize
the opportunities presented by the U.S. THC market through its
rights to Acreage Holdings, a vertically integrated multi-state
cannabis operator with principal operations in densely populated
states across the Northeast, as well as Wana Brands, a leading cannabis edible brand in
North America, and Jetty Extracts,
a California-based producer of
high-quality cannabis extracts and pioneer of clean vape
technology.
Beyond our world-class products, Canopy is leading the industry
forward through a commitment to social equity, responsible use, and
community reinvestment—pioneering a future where cannabis is
understood and welcomed for its potential to help achieve greater
well-being and life enhancement.
For more information visit www.canopygrowth.com.
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. To the extent any
forward-looking statements in this news release constitutes
"financial outlooks" within the meaning of applicable Canadian
securities laws, the reader is cautioned that this information may
not be appropriate for any other purpose and the reader should not
place undue reliance on such financial outlooks. Forward-looking
statements predict or describe our future operations, business
plans, business and investment strategies and the performance of
our investments. These forward-looking statements are generally
identified by their use of such terms and phrases as "intend,"
"goal," "strategy," "estimate," "expect," "project," "projections,"
"forecasts," "plans," "seeks," "anticipates," "potential,"
"proposed," "will," "should," "could," "would," "may," "likely,"
"designed to," "foreseeable future," "believe," "scheduled" and
other similar expressions. Our actual results or outcomes may
differ materially from those anticipated. You are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date the statement was made.
Forward-looking statements include, but are not limited to,
statements with respect to:
- 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 U.S. Drug Enforcement
Administration, the U.S. Federal Trade Commission, the U.S. Patent
and Trademark Office, the U.S. Department of Agriculture (the
"USDA") and any state equivalent regulatory agencies over U.S. hemp
(including CBD) products;
- expectations regarding the amount or frequency of impairment
losses, including as a result of the write-down of intangible
assets, including goodwill;
- the Company's ability to execute on its strategy to accelerate
the Company's entry into the U.S. cannabis market through the
creation of Canopy USA (the
"Reorganization");
- expectations regarding the potential success of, and the costs
and benefits associated with the Reorganization;
- expectations to capitalize on the opportunity for growth in
the United States cannabis sector
and the anticipated benefits of such strategy;
- the timing and outcome of the arrangement agreement we entered
into with Acreage Holdings and Canopy USA on October 24,
2022 (the "Floating Share Arrangement Agreement)", the
anticipated benefits of such arrangement, the anticipated timing of
the related Acreage Holdings special meeting of shareholders
and the acquisition of Acreage Holdings' Class E subordinate voting
shares (the "Fixed Shares") and Class D subordinated voting shares
by Canopy USA, the satisfaction or
waiver of the closing conditions set out in the Floating Share
Arrangement Agreement and the arrangement agreement we previously
entered into with Acreage Holdings, including receipt of all
regulatory approvals, and the anticipated timing and occurrence of
the Company's exercise of the option to acquire the Fixed Shares
and closing of such transaction;
- the anticipated timing and occurrence of the Company's special
meeting of shareholders to approve an amendment to the Company's
articles of incorporation;
- expectations related to our announcement of certain
restructuring actions (the "Restructuring Actions"), the
Reorganization and any progress, challenges and effects related
thereto as well as changes in strategy, metrics, investments,
costs, operating expenses, employee turnover and other changes with
respect thereto;
- 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;
- 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 grant, renewal and impact of any license or supplemental
license to conduct activities with cannabis or any amendments
thereof;
- 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;
- our international activities and joint venture interests,
including required regulatory approvals and licensing, anticipated
costs and timing, and expected impact;
- our ability to successfully create and launch brands and
further create, launch and scale cannabis-based products and U.S.
hemp-derived consumer products in jurisdictions where such products
are legal and that we currently operate in;
- the benefits, viability, safety, efficacy, dosing and social
acceptance of cannabis, including CBD and other cannabinoids;
- the anticipated benefits and impact of the investments in us
(the "CBI Group Investments") from Constellation Brands, Inc.
("CBI") and its affiliates (together, the "CBI Group");
- the potential exercise of the warrants held by the CBI Group,
pre-emptive rights and/or top-up rights held by the CBI Group;
- expectations regarding the use of proceeds of equity
financings, including the proceeds from the CBI Group
Investments;
- the legalization of the use of cannabis for medical or
recreational in jurisdictions outside of Canada, the related timing and impact thereof
and our intentions to participate in such markets, if and when such
use is legalized;
- our ability to execute on our strategy and the anticipated
benefits of such strategy;
- the ongoing impact of the legalization of additional cannabis
product types and forms for recreational use in Canada, including federal, provincial,
territorial and municipal regulations pertaining thereto, the
related timing and impact thereof and our intentions to participate
in such markets;
- the ongoing impact of developing provincial, territorial and
municipal regulations pertaining to the sale and distribution of
cannabis, the related timing and impact thereof, as well as the
restrictions on federally regulated cannabis producers
participating in certain retail markets and our intentions to
participate in such markets to the extent permissible;
- the timing and nature of legislative changes in the U.S.
regarding the regulation of cannabis including tetrahydrocannabinol
("THC");
- the future performance of our business and operations;
- our competitive advantages and business strategies;
- the competitive conditions of the industry;
- the expected growth in the number of customers using our
products;
- our ability or plans to identify, develop, commercialize or
expand our technology and research and development initiatives in
cannabinoids, or the success thereof;
- expectations regarding revenues, expenses and anticipated cash
needs;
- expectations regarding cash flow, liquidity and sources of
funding;
- expectations regarding capital expenditures;
- 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. Financial outlooks, as with forward-looking
statements generally, are, without limitation, based on the
assumptions and subject to various risks as set out herein. Our
actual financial position and results of operations may differ
materially from management's current expectations and, as a result,
our SG&A cost savings may differ materially from the values
provided in this news release.
By their nature, forward-looking statements are subject to
inherent risks and uncertainties that may be general or specific
and which give rise to the possibility that expectations,
forecasts, predictions, projections or conclusions will not prove
to be accurate, that assumptions may not be correct and that
objectives, strategic goals and priorities will not be achieved. A
variety of factors, including known and unknown risks, many of
which are beyond our control, could cause actual results to differ
materially from the forward-looking statements in this press
release and other reports we file with, or furnish to, the
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, our limited operating history; the
risks that the stock exchanges on which we are listed may disagree
with our interpretations of their policies, including that
financial consolidation of Canopy USA may be permissible in the event that
Canopy USA closes on the
acquisition of Wana, Jetty or the Fixed Shares of Acreage Holdings;
inherent uncertainty associated with projections; the diversion of
management time on issues related to Canopy USA; the ability of parties to certain
transactions to receive, in a timely manner and on satisfactory
terms, the necessary regulatory, court and shareholder approvals;
the risks that our Restructuring Actions will not result in the
expected cost-savings, efficiencies and other benefits or will
result in greater than anticipated turnover in personnel; risks
that we may be required to write down intangible assets, including
goodwill, due to impairment; 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; inflation risks; 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; the implementation and effectiveness of key
personnel changes; risks associated with jointly owned investments;
risks relating to our current and future operations in emerging
markets; risks relating to inventory write downs; future levels of
revenues and the impact of increasing levels of competition; risks
related to the protection and enforcement of our intellectual
property rights; our ability to manage disruptions in credit
markets or changes to our credit ratings; future levels of capital,
environmental or maintenance expenditures, general and
administrative and other expenses; the success or timing of
completion of ongoing or anticipated capital or maintenance
projects; risks related to the integration of acquired businesses;
the timing and manner of the legalization of cannabis in
the United States; business
strategies, growth opportunities and expected investment; the
adequacy of our capital resources and liquidity, including but not
limited to, availability of sufficient cash flow to execute our
business plan (either within the expected timeframe or at all);
counterparty risks and liquidity risks that may impact our ability
to obtain loans and other credit facilities on favorable terms; the
potential effects of judicial, regulatory or other proceedings, or
threatened litigation or proceedings, on our business, financial
condition, results of operations and cash flows; risks related to
stock exchange restrictions; risks associated with divestment and
restructuring; volatility in and/or degradation of general
economic, market, industry or business conditions; our exposure to
risks related to an agricultural business, including wholesale
price volatility and variable product quality; third-party
manufacturing risks; third-party transportation risks; compliance
with applicable environmental, economic, health and safety, energy
and other policies and regulations and in particular health
concerns with respect to vaping and the use of cannabis and U.S.
hemp products in vaping devices; the anticipated effects of actions
of third parties such as competitors, activist investors or
federal, state, provincial, territorial or local regulatory
authorities, self-regulatory organizations, plaintiffs in
litigation or persons threatening litigation; changes in regulatory
requirements in relation to our business and products; and the
factors discussed under the heading "Risk Factors" in the Company's
Annual Report on Form 10-K for the year ended March 31, 2022 and in Item 1A of Part II of the
Form 10-Q. 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.
Participants in the Solicitation
Canopy Growth and its directors and executive officers may be
deemed participants in the solicitation of proxies from Canopy
Growth shareholders with respect to the Amendment Proposal. A list
of the names of those directors and executive officers and a
description of their interests in Canopy Growth is contained in
Canopy Growth's definitive proxy statement on Schedule 14A filed
with the SEC on July 29, 2022 and is
available free of charge at the SEC's website at www.sec.gov, or by
directing a request to Canopy Growth Corporation, 1 Hershey Drive,
Smiths Falls, Ontario, K7A 0A8 or
by email to invest@canopygrowth.com. Additional information
regarding the interests of such participants will be contained in
the Proxy Statement when it becomes available. Investors should
read the Proxy Statement when it becomes available because it will
contain important information.
Schedule 1
CANOPY GROWTH
CORPORATION CONDENSED INTERIM CONSOLIDATED BALANCE
SHEETS (in thousands of Canadian dollars, except number of
shares and per share data, unaudited)
|
|
|
|
September 30,
2022
|
|
|
March 31,
2022
|
ASSETS
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
746,719
|
|
|
$
|
776,005
|
Short-term
investments
|
|
|
|
396,702
|
|
|
|
595,651
|
Restricted short-term
investments
|
|
|
|
12,352
|
|
|
|
12,216
|
Amounts receivable,
net
|
|
|
|
108,236
|
|
|
|
96,443
|
Inventory
|
|
|
|
211,209
|
|
|
|
204,387
|
Prepaid expenses and
other assets
|
|
|
|
62,957
|
|
|
|
52,700
|
Total current
assets
|
|
|
|
1,538,175
|
|
|
|
1,737,402
|
Other financial
assets
|
|
|
|
625,059
|
|
|
|
800,328
|
Property, plant and
equipment
|
|
|
|
864,523
|
|
|
|
942,780
|
Intangible
assets
|
|
|
|
223,501
|
|
|
|
252,695
|
Goodwill
|
|
|
|
136,513
|
|
|
|
1,866,503
|
Other assets
|
|
|
|
14,499
|
|
|
|
15,342
|
Total
assets
|
|
|
$
|
3,402,270
|
|
|
$
|
5,615,050
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
|
$
|
68,203
|
|
|
$
|
64,270
|
Other accrued expenses
and liabilities
|
|
|
|
88,577
|
|
|
|
75,278
|
Current portion of
long-term debt
|
|
|
|
321,976
|
|
|
|
9,296
|
Other
liabilities
|
|
|
|
63,645
|
|
|
|
64,054
|
Total current
liabilities
|
|
|
|
542,401
|
|
|
|
212,898
|
Long-term
debt
|
|
|
|
1,032,134
|
|
|
|
1,491,695
|
Deferred income tax
liabilities
|
|
|
|
9,758
|
|
|
|
15,991
|
Liability arising from
Acreage Arrangement
|
|
|
|
-
|
|
|
|
47,000
|
Warrant derivative
liability
|
|
|
|
691
|
|
|
|
26,920
|
Other
liabilities
|
|
|
|
153,257
|
|
|
|
190,049
|
Total
liabilities
|
|
|
|
1,738,241
|
|
|
|
1,984,553
|
Commitments and
contingencies
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
|
|
35,900
|
|
|
|
36,200
|
Canopy Growth
Corporation shareholders' equity:
|
|
|
|
|
|
|
Common shares - $nil
par value; Authorized - unlimited number of shares;
Issued - 480,260,882 shares and 394,422,604 shares,
respectively
|
|
|
|
7,818,089
|
|
|
|
7,482,809
|
Additional paid-in
capital
|
|
|
|
2,516,811
|
|
|
|
2,519,766
|
Accumulated other
comprehensive loss
|
|
|
|
(33,707)
|
|
|
|
(42,282)
|
Deficit
|
|
|
|
(8,676,020)
|
|
|
|
(6,370,337)
|
Total Canopy Growth
Corporation shareholders' equity
|
|
|
|
1,625,173
|
|
|
|
3,589,956
|
Noncontrolling
interests
|
|
|
|
2,956
|
|
|
|
4,341
|
Total shareholders'
equity
|
|
|
|
1,628,129
|
|
|
|
3,594,297
|
Total liabilities and
shareholders' equity
|
|
|
$
|
3,402,270
|
|
|
$
|
5,615,050
|
Schedule 2
CANOPY GROWTH
CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (in
thousands of Canadian dollars, except number of shares and per
share data, unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
|
|
2022
|
|
|
2021
|
|
Revenue
|
|
$
|
130,359
|
|
|
$
|
145,648
|
|
Excise taxes
|
|
|
12,496
|
|
|
|
14,274
|
|
Net revenue
|
|
|
117,863
|
|
|
|
131,374
|
|
Cost of goods
sold
|
|
|
114,042
|
|
|
|
202,514
|
|
Gross
margin
|
|
|
3,821
|
|
|
|
(71,140)
|
|
Operating
expenses:
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
|
125,842
|
|
|
|
125,756
|
|
Share-based
compensation
|
|
|
9,858
|
|
|
|
15,953
|
|
Asset impairment and
restructuring costs
|
|
|
43,968
|
|
|
|
2,510
|
|
Total operating
expenses
|
|
|
179,668
|
|
|
|
144,219
|
|
Operating
loss
|
|
|
(175,847)
|
|
|
|
(215,359)
|
|
Other income
(expense), net
|
|
|
(47,844)
|
|
|
|
195,821
|
|
Loss before income
taxes
|
|
|
(223,691)
|
|
|
|
(19,538)
|
|
Income tax (expense)
recovery
|
|
|
(8,220)
|
|
|
|
3,207
|
|
Net loss
|
|
|
(231,911)
|
|
|
|
(16,331)
|
|
Net loss attributable
to noncontrolling interests and
redeemable noncontrolling interest
|
|
|
(10,105)
|
|
|
|
(5,273)
|
|
Net loss attributable
to Canopy Growth Corporation
|
|
$
|
(221,806)
|
|
|
$
|
(11,058)
|
|
|
|
|
|
|
|
|
Basic and diluted loss
per share
|
|
$
|
(0.47)
|
|
|
$
|
(0.03)
|
|
Basic and diluted
weighted average common shares outstanding
|
|
|
471,592,150
|
|
|
|
393,274,758
|
|
Schedule 3
CANOPY GROWTH
CORPORATION CONDENSED INTERIM CONSOLIDATED STATEMENTS OF
CASH FLOWS (in thousands of Canadian dollars,
unaudited)
|
|
|
Six months ended
September 30,
|
|
|
2022
|
|
|
2021
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(2,319,467)
|
|
|
$
|
373,624
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
|
29,608
|
|
|
|
37,108
|
Amortization of
intangible assets
|
|
|
13,536
|
|
|
|
16,804
|
Share of loss on
equity method investments
|
|
|
-
|
|
|
|
100
|
Share-based
compensation
|
|
|
15,297
|
|
|
|
29,079
|
Asset impairment and
restructuring costs
|
|
|
1,783,784
|
|
|
|
80,690
|
Income tax expense
(recovery)
|
|
|
11,969
|
|
|
|
(307)
|
Non-cash fair value
adjustments and charges related to
settlement of unsecured senior notes
|
|
|
231,704
|
|
|
|
(834,090)
|
Change in operating
assets and liabilities, net of effects from
purchases of businesses:
|
|
|
|
|
|
Amounts
receivable
|
|
|
(11,793)
|
|
|
|
12,354
|
Inventory
|
|
|
(6,822)
|
|
|
|
(3,423)
|
Prepaid expenses and
other assets
|
|
|
(17,567)
|
|
|
|
40,208
|
Accounts payable and
accrued liabilities
|
|
|
14,842
|
|
|
|
3,778
|
Other, including
non-cash foreign currency
|
|
|
(19,006)
|
|
|
|
(7,670)
|
Net cash used in
operating activities
|
|
|
(273,915)
|
|
|
|
(251,745)
|
Cash flows from
investing activities:
|
|
|
|
|
|
Purchases of and
deposits on property, plant and equipment
|
|
|
(4,308)
|
|
|
|
(35,658)
|
Purchases of
intangible assets
|
|
|
(938)
|
|
|
|
(2,729)
|
Proceeds on sale of
property, plant and equipment
|
|
|
10,784
|
|
|
|
2,290
|
Redemption (purchases)
of short-term investments
|
|
|
211,092
|
|
|
|
(705)
|
Net cash proceeds on
sale of subsidiaries
|
|
|
12,432
|
|
|
|
10,324
|
(Investment in) sale
of other financial assets
|
|
|
(29,205)
|
|
|
|
110
|
Net cash outflow on
acquisition of subsidiaries
|
|
|
-
|
|
|
|
(9,070)
|
Other investing
activities
|
|
|
7,143
|
|
|
|
(10,859)
|
Net cash provided by
(used in) investing activities
|
|
|
207,000
|
|
|
|
(46,297)
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from issuance
of common shares and warrants
|
|
|
856
|
|
|
|
1,460
|
Proceeds from exercise
of stock options
|
|
|
270
|
|
|
|
4,886
|
Repayment of long-term
debt
|
|
|
(423)
|
|
|
|
(49,991)
|
Other financing
activities
|
|
|
(13,116)
|
|
|
|
(3,036
|
Net cash used in
financing activities
|
|
|
(12,413)
|
|
|
|
(46,681)
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
|
50,042
|
|
|
|
(2,309)
|
Net decrease in cash
and cash equivalents
|
|
|
(29,286)
|
|
|
|
(347,032)
|
Cash and cash
equivalents, beginning of period
|
|
|
776,005
|
|
|
|
1,154,653
|
Cash and cash
equivalents, end of period
|
|
$
|
746,719
|
|
|
$
|
807,621
|
Schedule 4
Adjusted Gross
Margin1 Reconciliation (Non-GAAP Measure)
|
|
|
Three months ended
September 30,
|
(in thousands of
Canadian dollars except where indicated; unaudited)
|
|
2022
|
|
|
2021
|
Net revenue
|
|
$
|
117,863
|
|
|
$
|
131,374
|
|
|
|
|
|
|
Gross margin, as
reported
|
|
|
3,821
|
|
|
|
(71,140)
|
Adjustments to gross
margin:
|
|
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
8,023
|
|
|
|
-
|
Charges related to the
flow-through of inventory
step-up on business combinations
|
|
|
-
|
|
|
|
3,123
|
Adjusted gross
margin1
|
|
$
|
11,844
|
|
|
$
|
(68,017)
|
|
|
|
|
|
|
Adjusted gross margin
percentage1
|
|
|
10 %
|
|
|
|
(52) %
|
1 Adjusted
gross margin and adjusted gross margin percentage are non-GAAP
measures. See "Non-GAAP Measures".
|
Schedule 5
Adjusted
EBITDA1 Reconciliation (Non-GAAP
Measure)
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
(in thousands of
Canadian dollars, unaudited)
|
|
2022
|
|
|
2021
|
|
Net loss
|
|
$
|
(231,911)
|
|
|
$
|
(16,331)
|
|
Income tax expense
(recovery)
|
|
|
8,220
|
|
|
|
(3,207)
|
|
Other (income) expense,
net
|
|
|
47,844
|
|
|
|
(195,821)
|
|
Share-based
compensation2
|
|
|
9,858
|
|
|
|
15,953
|
|
Acquisition-related
costs
|
|
|
14,606
|
|
|
|
2,391
|
|
Depreciation and
amortization2
|
|
|
21,293
|
|
|
|
28,780
|
|
Asset impairment and
restructuring costs
|
|
|
43,968
|
|
|
|
2,510
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
8,023
|
|
|
|
-
|
|
Charges related to the
flow-through of inventory
step-up on business combinations
|
|
|
-
|
|
|
|
3,123
|
|
Adjusted
EBITDA1
|
|
$
|
(78,099)
|
|
|
$
|
(162,602)
|
|
|
|
|
|
|
|
|
1 Adjusted
EBITDA is a non-GAAP measure. See "Non-GAAP Measures".
2 From Consolidated Statements of Cash Flows.
|
Schedule 6
Free Cash
Flow1 Reconciliation (Non-GAAP Measure)
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
(in thousands of
Canadian dollars, unaudited)
|
|
2022
|
|
|
2021
|
|
Net cash used in
operating activities
|
|
$
|
(133,400)
|
|
|
$
|
(85,965)
|
|
Purchases of and
deposits on property, plant and equipment
|
|
|
(2,015)
|
|
|
|
(15,379)
|
|
Free cash
flow1
|
|
$
|
(135,415)
|
|
|
$
|
(101,344)
|
|
1 Free cash
flow is a non-GAAP measure. See "Non-GAAP Measures".
|
Schedule 7
Segmented Gross
Margin and Segmented Adjusted Gross Margin1
Reconciliation (Non-GAAP Measure)2
|
|
Three months ended
September 30,
|
(in thousands of
Canadian dollars except where indicated; unaudited)
|
2022
|
|
2021
|
Canada cannabis
segment
|
|
|
|
Net revenue
|
$
|
52,304
|
|
$
|
71,672
|
Gross margin, as
reported
|
$
|
(7,652)
|
|
|
(91,980)
|
Gross margin
percentage, as reported
|
(15) %
|
|
|
(128) %
|
Adjustments to gross
margin:
|
|
|
|
Charges related to the
flow-through of inventory
step-up on business combinations
|
-
|
|
|
3,123
|
Adjusted gross
margin1
|
$
|
(7,652)
|
|
$
|
(88,857)
|
Adjusted gross margin
percentage1
|
(15) %
|
|
|
(124) %
|
|
|
|
|
Rest-of-world
cannabis segment
|
|
|
|
Revenue
|
$
|
10,552
|
|
$
|
23,653
|
Gross margin, as
reported
|
(1,332)
|
|
|
10,978
|
Gross margin
percentage, as reported
|
(13) %
|
|
|
46 %
|
Adjustments to gross
margin:
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
3,730
|
|
|
-
|
Adjusted gross
margin1
|
$
|
2,398
|
|
$
|
10,978
|
Adjusted gross margin
percentage1
|
23 %
|
|
|
46 %
|
|
|
|
|
Storz & Bickel
segment
|
|
|
|
Revenue
|
$
|
13,494
|
|
$
|
14,511
|
Gross margin, as
reported
|
6,002
|
|
|
5,351
|
Gross margin
percentage, as reported
|
44 %
|
|
|
37 %
|
|
|
|
|
Adjusted gross
margin1
|
$
|
6,002
|
|
$
|
5,351
|
Adjusted gross margin
percentage1
|
44 %
|
|
|
37 %
|
|
|
|
|
BioSteel
segment
|
|
|
|
Revenue
|
$
|
29,922
|
|
$
|
7,512
|
Gross margin, as
reported
|
4,432
|
|
|
(404)
|
Gross margin
percentage, as reported
|
15 %
|
|
|
(5) %
|
Adjustments to gross
margin:
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
3,201
|
|
|
-
|
Adjusted gross
margin1
|
$
|
7,633
|
|
$
|
(404)
|
Adjusted gross margin
percentage1
|
26 %
|
|
|
(5) %
|
|
|
|
|
This Works
segment
|
|
|
|
Revenue
|
$
|
6,868
|
|
$
|
9,027
|
Gross margin, as
reported
|
2,303
|
|
|
3,558
|
Gross margin
percentage, as reported
|
34 %
|
|
|
39 %
|
Adjustments to gross
margin:
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
1,092
|
|
|
-
|
Adjusted gross
margin1
|
$
|
3,395
|
|
$
|
3,558
|
Adjusted gross margin
percentage1
|
49 %
|
|
|
39 %
|
|
|
|
|
1 Adjusted
gross margin and adjusted gross margin percentage are non-GAAP
measures. See "Non-GAAP Measures".
2 In Q2 FY23, we are reporting our financial results for
the following five reportable segments: (i) Canada cannabis; (ii)
rest-of-world cannabis; (iii) Storz & Bickel; (iv) BioSteel;
and (v) This Works. Information regarding segment net revenue and
segment gross margin for the comparative periods has been restated
to reflect the aforementioned change in reportable
segments.
|
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SOURCE Canopy Growth Corporation