Company Advances Premium Brand Driven
Strategy, Laying a Foundation for Long-Term Sustainable Growth and
Profitability
SMITHS
FALLS, ON, May 27, 2022 /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 ended March 31, 2022.
All financial information in this press release is reported in
Canadian dollars, unless otherwise indicated.
Highlights
- The Company progressed its leading North American brand driven
strategy with Canopy Growth entering into plans to acquire
Wana Brands, the #1 cannabis edibles
brand in North America, and Jetty
Extracts ("Jetty"), a top 10 Cannabis brand in California, adding to the robust brand
portfolio.
- Premium brands gained ground with Canadian consumers with
Company maintaining #1 share of premium flower category throughout
FY20221, led by in demand offerings from Doja, 7ACRES
and 7ACRES Collective brands; and improved market share performance
in the mainstream flower category in Q4 FY2022 with the Tweed
rebrand and new Tweed product offerings in flower and
beverages.
- Storz & Bickel posted 22nd year of consecutive
revenue growth in FY2022; strong consumer demand for Storz &
Bickel vaporizers including the new VOLCANO ONYX and MIGHTY+ drove
21% increase in revenue in Q4 FY2022 versus Q4 FY2021.
- Increased distribution of BioSteel hydration products drove
year-over-year revenue growth in FY2022 of 56% versus FY2021.
Focusing strategic investments to accelerating brand growth with
aspiration to be top 4 player in the North American sports drink
market.
- The Company generated Net revenue of $520 million in FY2022, representing a decline of
5% versus FY2021.
- Through restructuring actions that were previously announced on
April 26, 2022, management expects to
generate COGS savings of $30 -
$50 million and SG&A expense
reductions of $70 – $100 million, both within 12 to 18 months.
"Canopy Growth is building the industry's leading portfolio of
premium brands across North
America. We've taken concrete steps to advance this ambition
by strengthening our positioning in Canada, and further bolstering our U.S. THC
ecosystem through the addition of two high performance brands in
Wana Brands and Jetty
Extracts. In the fiscal year ahead, we will remain focused on
growing our market share in the key segments that will drive
profitable growth and continuing to scale our premium brands across
North America."
David Klein, Chief Executive
Officer
"Achieving profitability is critical and we have undertaken
additional initiatives to streamline and drive efficiencies for our
global cannabis business. In FY2023, we are focused on
executing our path to profitability in Canada, while we continue to invest in high
potential opportunities – particularly in BioSteel, and further
developing our U.S. THC ecosystem, which we believe remains
significantly under-appreciated by the market."
Judy Hong, Chief Financial
Officer
|
1 Unless
otherwise indicated, market share data disclosed in this press
release is calculated using the Company's internal proprietary
market share tool that utilizes point of sales data supplied by a
third-party data provider, government agencies and our own retail
store operations across the country. The tool captures point of
sale data from an average of 28% of stores in Alberta, British
Columbia, Saskatchewan, Manitoba and Newfoundland & Labrador,
point of sale data from 100% of stores in New Brunswick, Nova
Scotia, Prince Edward Island and Quebec, as well as depletions and
e-commerce sales data from the OCS.
|
FY2023 Priorities & Outlook
With the foundation for long-term sustainable growth in place,
Canopy Growth is committed to further advancing the Company's
aspiration to become the leading premium cannabis branded company
in North America.
In FY2023, Canopy will focus on:
- Strengthening our market position in premium segments in
Canada – driven by our flower
cultivation strategy, delivering flower with in-demand attributes
under the Doja and 7ACRES brands;
- Making strategic investments to increase distribution, brand
activation and new product development in high-growth consumer
packaged good ("CPG") brands – BioSteel and Storz &
Bickel;
- Identifying opportunities to expand brands across the U.S. and
within the Canadian recreational market, to fully realize the North
American potential of the Canopy Growth brand portfolio; and
- As a result of these actions, the Company expects to be
Adjusted EBITDA positive in FY2024 excluding investments in
BioSteel and U.S. THC.
Fourth Quarter Fiscal Year
2022 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
|
|
$111.8
|
(142%)
|
(32%)
|
$(578.6)
|
$(121.8)
|
$(126.8)
|
vs. Q4
FY2021
|
|
(25%)
|
(14,900) bps
|
(4,600) bps
|
6%
|
(30%)
|
(2%)
|
Fiscal
Year 2022 Financial Summary
(in millions of Canadian
dollars,
unaudited)
|
|
Net Revenue
|
Gross margin
percentage
|
Adjusted
gross margin
percentage5
|
Net loss
|
Adjusted
EBITDA3
|
Free cash
flow4
|
Reported
|
|
$520.3
|
(37%)
|
(11%)
|
$(320.5)
|
$(415.4)
|
$(582.5)
|
vs. FY2021
|
|
(5%)
|
(4,900) bps
|
(2,800) bps
|
81%
|
(22%)
|
8%
|
|
2 Adjusted
gross margin is a non-GAAP measure, and for Q4 FY2022 excludes $4.2
million related to the flow-through of inventory step-up associated
with the acquisition of Supreme Cannabis and $119.1 million of
restructuring costs recorded in cost of goods sold (Q4 FY2021 -
excludes $nil related to the flow-through of inventory step-up and
$10.3 million of restructuring costs recorded in cost of goods
sold). 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 FY2022 excludes $11.8
million related to the flow-through of inventory step-up associated
with the acquisition of Supreme Cannabis and $123.7 million of
restructuring costs recorded in cost of goods sold (FY2021 -
excludes $1.5 million related to the flow-through of inventory
step-up and $26.0 million of restructuring costs recorded in cost
of goods sold). See "Non-GAAP Measures".
|
Fourth Quarter
and Fiscal Year 2022 Financial Summary
Revenues:
Net revenue of $112 million in Q4
FY2022 declined 25% versus Q4 FY2021. Total global cannabis net
revenue of $66 million in Q4 FY2022,
represented a decline of 35% over Q4 FY2021. Other consumer
products revenue of $46 million in Q4
FY2022, represented a decline of 3% over Q4 FY2021. Excluding the
impact from acquired businesses and divestiture of C3, net revenue
declined 26% and global cannabis net revenue declined 38% versus Q4
FY2021.
Net revenue of $520 million in
FY2022 declined 5% versus FY2021. Total global cannabis net revenue
of $337 million in FY2022,
represented a decline of 11% over FY2021. Other consumer products
revenue of $183 million in FY2022,
represented an increase of 9% over FY2021. Excluding the impact
from acquired businesses and divestiture of C3, net revenue
declined 9% and global cannabis net revenue declined 19% versus
FY2021.
Gross margin:
Reported gross margin in Q4 FY2022 was (142%) as compared to 7%
in Q4 FY2021. Excluding non-cash restructuring costs recorded in
COGS of $119 million and inventory
step-up charges from acquisitions of $4
million, adjusted gross margin was (32%). Comparatively
gross margin in Q4 FY2021 was impacted by restructuring charges
totaling $10 million. Gross margin in
Q4 FY2022 was further impacted by lower production output and price
compression in the Canadian recreational business as well as higher
third-party shipping, distribution and warehousing costs across
North America.
Reported gross margin in FY2022 was (37%) as compared to 12% in
FY2021. Excluding non-cash restructuring costs recorded in cost of
goods sold of $124 million and
inventory step-up charges from acquisitions of $12 million, adjusted gross margin was
approximately (11%). Gross margin in FY2022 was impacted by a
year-over-year decrease in net revenue and continued price
compression in the Canadian recreational business, inventory
write-offs driven by lower than expected demand as well as higher
third-party shipping, distribution and warehousing costs across
North America. Gross margin in
FY2022 benefited from payroll subsidies in the amount of
$24 million received from the
Canadian government, pursuant to a COVID-19 relief program,
compared to $6 million in FY2021.
Operating expenses:
Total SG&A ("SG&A") expenses in Q4
FY2022 declined by 21% versus Q4
FY2021, driven by year-over-year
reductions in General & Administrative ("G&A") and Research and Development ("R&D")
expenses. G&A expenses declined 38% year-over-year
primarily due to reductions in staffing, professional fees,
executive compensation and employee bonus, and continued cost
reductions, partially offset by lower payroll subsidies received
from the Canadian government pursuant to a COVID-19 relief program,
relative to the prior year. R&D expenses declined
45% year-over-year principally due to a more disciplined
approach to R&D investments and the closure of certain R&D
facilities in the prior year. Sales & Marketing
("S&M") expenses were flat year-over-year.
Total SG&A expenses in FY2022 declined by 18% versus FY2021,
driven by year-over-year reductions in G&A and R&D
expenses, partially offset by an increase in S&M expenses.
G&A expenses declined 46% year-over-year primarily due to
reductions in staffing, professional fees, executive compensation
and employee bonus, and continued cost reductions. R&D expenses
declined 44% year-over-year principally due to a more disciplined
approach to R&D investments and the closure of certain R&D
facilities in the prior year. S&M expenses increased 23%
year-over-year primarily due to a return to more normal advertising
and promotional spending in fiscal 2022. S&M expenses was
further driven by higher sponsorship fees associated with BioSteel
and increased sales and marketing costs associated with the
acquisitions of Supreme Cannabis and Ace
Valley.
Net Loss:
Net Loss in Q4 FY2022 was $579
million, which is a $38
million improvement versus Q4 FY2021, driven primarily
by non-cash fair value changes, partially offset by higher non-cash
asset impairment and restructuring charges.
Net Loss in FY2022 was $320
million, which is a $1,350
million improvement versus FY2021, driven primarily by
non-cash fair value changes, lower operating expenses, including
lower non-cash asset impairment and restructuring charges,
partially offset by lower gross margins.
Adjusted EBITDA:
Adjusted EBITDA loss in Q4 FY2022 was
$122 million, a $28 million increase in Adjusted
EBITDA loss versus Q4 FY2021 primarily driven by lower sales
and a decline in gross margins, partially offset by the reduction
in our total SG&A expenses.
Adjusted EBITDA loss in FY2022 was $415
million, a $75 million
increase in Adjusted EBITDA loss versus FY2021, driven primarily
driven by lower sales and a decline in gross margins, partially
offset by the reduction in our total SG&A expenses.
Free Cash Flow:
Free Cash Flow in Q4 FY2022 was an
outflow of $127 million, a 2% increase in
outflow versus Q4 FY2021. Relative to Q4
FY2021, the Free Cash Flow outflow increase reflects
higher interest paid partially offset by lower capital
expenditures.
Free Cash Flow in FY2022 was an outflow of $582 million, an 8% decrease in outflow versus
FY2021. Relative to FY2021, the Free Cash Flow outflow decrease is
due to lower S&GA expenses and reduction in capital
expenditures, partially offset by higher cash interest
payments.
Cash Position:
Cash and Short-term investments amounted to $1.4
billion at March 31,
2022, representing a decrease
of $0.9 billion from $2.3 billion at March 31,
2021 reflecting EBITDA losses,
capital investments and the upfront payment made as
consideration for the option to acquire Wana Brands upon federal permissibility of THC
in the U.S.
Business Highlights
Developing a robust North American brand driven strategy
- In the very competitive Canadian adult-use market, the
Company's Doja, 7ACRES, 7ACRES Craft Collection, Deep Space, Tweed,
and Ace Valley branded product
offerings:
- Maintained Canopy Growth's #1 share of the premium flower
market in FY2022 by leveraging established cannabis brands – Doja
and 7ACRES;
- Nearly doubled the Company's share of the mainstream flower
market in Q4 FY2022. Performance benefited from strong consumer
demand for new Tweed flower strains, Chemdawg and Powdered Donuts,
launched in Q3 FY2022;
- The introduction of new beverage flavour extensions including,
Tweed Iced Tea Guava and Deep Space Orange Orbit, have helped drive
Tweed to the #1 market share rank in the under 5 mg THC beverage
category and Deep Space is the fastest growing brand and #2 rank in
the over 5 mg THC beverage category; and
- Following investments in plans to acquire Wana Brands and Jetty Extracts, exploring
avenues through which these brands can expand across the U.S. and
within the Canadian recreational market, to fully realize the North
American potential.
Driving Growth in our Consumer Product Brands
- Storz & Bickel: Gains in distribution and strong
consumer demand for new Storz & Bickel vaporizers including the
VOLCANO ONYX and MIGHTY+ drove 21% increase in revenue in Q4 FY2022
versus Q4 FY2021.
- BioSteel: Gains in distribution and sales velocity of
BioSteel ready-to-drink ("RTD") products drove a 56% increase in
revenue in FY2022 versus FY2021; BioSteel RTDs have achieved 18%
ACV7; New Grape and Cherry Lime RTD flavors began
shipping in Q4 FY202
- Martha Stewart CBD: Launched new Martha Stewart CBD
Tropical Medley CBD Wellness Gummies in Q4 FY2022. Launched Martha
Stewart CBD Wellness Topicals - Super Strength CBD, Sleep Science
CBD and Daily De-Stress CBD Creams.
Strengthening U.S. THC ecosystem, investing in plans to
acquire scalable brands in must‑win categories
- Jetty Extracts8: Strengthened U.S. THC
ecosystem with plan to acquire Jetty, a Top 5 cannabis
brand9, Top 10 California vape brand9, and
market leader with greater than 75% of the solventless vape
market10. Plan establishes the opportunity to scale the
Jetty brand to additional U.S. state markets and across the border
into Canada leveraging Jetty's
industry leading intellectual property.
- Wana Brands11:
Wana strengthened its management team with the appointment of a new
Chief Financial Officer and new Chief Operating Officer. In
addition, the company expanded its U.S. footprint in Q4 FY2022 with
the signing of license agreements covering Puerto Rico, its fourteenth license in the
U.S.. At least three more markets are expected to come online by
the end of CY2022. In Q4 FY2022, launched Wana Quick Spectrum Live
Rosin Quick Fast-Acting Gummies in Colorado.
|
7 IRI data
for the 4 weeks ended April 17, 2022
|
8 Until such
time as the Company elects to exercise its rights to acquire Jetty,
the Company will have no direct or indirect economic or voting
interests in Jetty, the Company will not directly or indirectly
control Jetty, and the Company, on the one hand, and Jetty, on the
other hand, will continue to operate independently of one another.
|
9 Based on
March 2022 BDSA data for dollars sold for all product
categories
|
10 Based on
year-to-date BDSA data for dollars sold of rosin cartridges through
March 2022
|
11 Until
such time as the Company exercises its rights to acquire each Wana
Entity, the Company will have no economic or voting interests in
Wana, the Company will not control Wana, and the Company and Wana
will continue to operate independently of one another.
|
Driving brand awareness through omni channel
activations
Fourth Quarter and Fiscal Year 2022 Revenue Review
Revenue by Channel
(in millions of
Canadian dollars, unaudited)
|
|
Q4
FY2022
|
Q4
FY2021
|
Vs. Q4
FY2021
|
FY2022
|
FY2021
|
Vs.
FY2021
|
Canadian
recreational cannabis
|
|
|
|
|
|
|
|
Business to
business12
|
|
$25.8
|
$43.3
|
(40%)
|
$143.7
|
$163.6
|
(12%)
|
Business to
consumer
|
|
$13.1
|
$17.8
|
(26%)
|
$61.6
|
$66.0
|
(7%)
|
|
|
$38.9
|
$61.1
|
(36%)
|
$205.3
|
$229.6
|
(11%)
|
Canadian medical
cannabis13
|
|
$13.1
|
$13.7
|
(4%)
|
$52.6
|
$55.5
|
(5%)
|
|
|
$52.0
|
$74.8
|
(30%)
|
$257.9
|
$285.1
|
(10%)
|
International and
other
|
|
|
|
|
|
|
|
C3
|
|
$3.1
|
$15.8
|
(80%)
|
$36.1
|
$62.3
|
(42%)
|
Other14
|
|
$10.9
|
$10.7
|
2%
|
$43.2
|
$31.3
|
38%
|
|
|
$14.0
|
$26.5
|
(47%)
|
$79.3
|
$93.6
|
(15%)
|
Global cannabis net
revenue
|
|
$66.0
|
$101.3
|
(35%)
|
$337.2
|
$378.7
|
(11%)
|
Other consumer
products
|
|
|
|
|
|
|
|
Storz &
Bickel
|
|
$21.6
|
$17.9
|
21%
|
$85.4
|
$81.0
|
5%
|
This Works
|
|
$6.0
|
$8.5
|
(29%)
|
$32.3
|
$33.3
|
(3%)
|
BioSteel15
|
|
$13.5
|
$13.6
|
(1%)
|
$44.6
|
$28.5
|
56%
|
Other
|
|
$4.7
|
$7.1
|
(34%)
|
$20.8
|
$25.1
|
(17%)
|
Other consumer
products revenue
|
|
$45.8
|
$47.1
|
(3%)
|
$183.1
|
$167.9
|
9%
|
Net
revenue
|
|
$111.8
|
$148.4
|
(25%)
|
$520.3
|
$546.6
|
(5%)
|
|
12 For Q4
FY2022, amount is net of excise taxes of $13.2 million and other
revenue adjustments of $3.3 million (Q4 FY2021 - $17.5 million and
$3.1 million, respectively). For FY2022, amount is net of excise
taxes of $56.7 million and other revenue adjustments of $7.3
million (FY2021 - $54.9 million and $14.0 million,
respectively).
|
13 For Q4
FY2022, amount is net of excise taxes of $1.2 million (Q4 FY2021 -
$1.4 million). For FY2022, amount is net of excise taxes of $5.2
million (FY2021 - $5.6 million).
|
14 For Q4
FY2022, amount reflects other revenue adjustments of $1.0 million
(Q4 FY2021 - $0.3 million). For FY2022, amount reflects other
revenue adjustments of $4.3 million (FY2021 - $0.7
million).
|
15 For Q4
FY2022, amount reflects other revenue adjustments of $3.9 million
(Q4 FY2021 - $4.2 million). For FY2022, amount reflects other
revenue adjustments of $9.9 million (FY2021 - $9.2
million).
|
Revenue by Form
(in millions of
Canadian dollars, unaudited)
|
|
Q4
FY2022
|
Q4
FY2021
|
Vs. Q4
FY2021
|
FY2022
|
FY2021
|
Vs.
FY2021
|
Canadian
recreational cannabis
|
|
|
|
|
|
|
|
Dry
bud16,17
|
|
$41.9
|
$67.9
|
(38%)
|
$211.7
|
$238.0
|
(11%)
|
Oils and
softgels16,17
|
|
$5.5
|
$6.7
|
(18%)
|
$25.5
|
$28.8
|
(11%)
|
Beverages, edibles,
topicals and vapes16,17
|
|
$8.0
|
$7.1
|
13%
|
$32.1
|
$31.7
|
1%
|
Other revenue
adjustments17
|
|
$(3.3)
|
$(3.1)
|
(6%)
|
$(7.3)
|
$(14.0)
|
48%
|
Excise taxes
|
|
$(13.2)
|
$(17.5)
|
25%
|
$(56.7)
|
$(54.9)
|
(3%)
|
|
|
$38.9
|
$61.1
|
(36%)
|
$205.3
|
$229.6
|
(11%)
|
Medical cannabis and
other18
|
|
|
|
|
|
|
|
Dry bud
|
|
$13.7
|
$9.7
|
41%
|
$45.4
|
$40.5
|
12%
|
Oils and soft
gels
|
|
$11.6
|
$25.5
|
(55%)
|
$71.2
|
$101.9
|
(30%)
|
Beverages, edibles,
topicals and vapes
|
|
$3.0
|
$6.4
|
(53%)
|
$20.5
|
$12.3
|
67%
|
Excise taxes
|
|
$(1.2)
|
$(1.4)
|
14%
|
$(5.2)
|
$(5.6)
|
7%
|
|
|
$27.1
|
$40.2
|
(33%)
|
$131.9
|
$149.1
|
(12%)
|
Global cannabis net
revenue
|
|
$66.0
|
$101.3
|
(35%)
|
$337.2
|
$378.7
|
(11%)
|
Other consumer
products
|
|
|
|
|
|
|
|
Storz &
Bickel
|
|
$21.6
|
$17.9
|
21%
|
$85.4
|
$81.0
|
5%
|
This Works
|
|
$6.0
|
$8.5
|
(29%)
|
$32.3
|
$33.3
|
(3%)
|
BioSteel18
|
|
$13.5
|
$13.6
|
(1%)
|
$44.6
|
$28.5
|
56%
|
Other
|
|
$4.7
|
$7.1
|
(34%)
|
$20.8
|
$25.1
|
(17%)
|
Other consumer
products revenue
|
|
$45.8
|
$47.1
|
(3%)
|
$183.1
|
$167.9
|
9%
|
|
|
|
|
|
|
|
|
Net
revenue
|
|
$111.8
|
$148.4
|
(25%)
|
$520.3
|
$546.6
|
(5%)
|
Canadian Cannabis
- Recreational B2B net sales in Q4 FY2022 decreased 40% over the
prior year period primarily due to the continued insufficient
supply of flower products with in-demand attributes and continued
price compression, particularly in the value-priced dried flower
category. These factors were partially offset by contribution from
the acquisitions of Ace Valley and Supreme Cannabis.
- Recreational B2C net sales in Q4 FY2022 decreased 26% versus Q4
FY2021 largely driven by increased competition from the rapid
increase in third party retail locations across provinces.
- Medical net revenue in Q4 FY2022 decreased 4% from Q4 FY2021
driven primarily by higher average order sizes offset by a fewer
number of orders.
International Cannabis
- C3 revenue in Q4 FY2022 decreased 80% year-over-year
as a result of the divestiture that was completed on January 31, 2022.
- Other revenue in Q4 FY2022 increased 2% over the prior year
period primarily due to bulk cannabis sales by Supreme Cannabis
into the Israel medical cannabis
market, offset by lower U.S. CBD sales.
Other Consumer Products
- BioSteel sales in Q4 FY2022 decreased 1% over Q4 FY2021 in part
due to shipment timing.
- Storz & Bickel vaporizer revenue in Q4 FY2022 increased 21%
over Q4 FY2021 due primarily to sales of new VOLCANO ONYX and
MIGHTY+ vaporizers launched late in the second quarter of
FY2022.
- This Works sales in Q4 FY2022 decreased 29% over Q4 FY2021 due
in part to lapping strong sales in the prior year.
The Q4 FY2022, FY2022, Q4 FY2021 and FY2021 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 May 27, 2022.
Webcast Information
A live audio webcast will be available at:
https://produceredition.webcasts.com/starthere.jsp?ei=1540225&tp_key=a04693a9b2
Replay Information
A replay will be accessible by webcast until 11:59 PM ET on August 25,
2022 at:
https://produceredition.webcasts.com/starthere.jsp?ei=1540225&tp_key=a04693a9b2
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 Annual Report on Form 10-K to be filed with the
Securities and Exchange Commission ("SEC").
Free Cash Flow is a non- GAAP measure used by management that is
not defined by U.S. GAAP and may not be comparable to similar
measures presented by other companies. This measure is calculated
as net cash provided by (used in) operating activities less
purchases of and deposits on property, plant and equipment. The
Free Cash Flow reconciliation is presented within this news release
and explained in the Company's 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 amount or frequency of impairment
losses, including as a result of the write-down of intangible
assets, including goodwill;
- expectations related to our announcement of certain
restructuring actions (the "Restructuring Actions") 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 amended plan of arrangement with Acreage Holdings, Inc.,
including the consummation of such acquisition;
- the definitive agreements with Mountain High Products, LLC,
Wana Wellness, LLC and The Cima Group, LLC (each, a "Wana Entity"),
including the consummation of the acquisition of each Wana
Entity;
- the grant, renewal and impact of any license or supplemental
license to conduct activities with cannabis or any amendments
thereof;
- our international activities and joint venture interests,
including required regulatory approvals and licensing, anticipated
costs and timing, and expected impact;
- our ability to successfully create and launch brands and
further create, launch and scale cannabis-based products and U.S.
hemp-derived consumer products in jurisdictions where such products
are legal and that we currently operate in;
- the benefits, viability, safety, efficacy, dosing and social
acceptance of cannabis, including CBD and other cannabinoids;
- the anticipated benefits and impact of the investments in us
(the "CBI Group Investments") from Constellation Brands, Inc.
("CBI") and its affiliates (together, the "CBI Group");
- the potential exercise of the warrants held by the CBI Group,
pre-emptive rights and/or top-up rights held by the CBI Group,
including proceeds to us that may result therefrom or the potential
conversion of the convertible senior notes issued by Canopy Growth
and held by the CBI Group;
- expectations regarding the use of proceeds of equity
financings, including the proceeds from the CBI Group
Investments;
- the legalization of the use of cannabis for medical or
recreational in jurisdictions outside of Canada, the related timing and impact thereof
and our intentions to participate in such markets, if and when such
use is legalized;
- our ability to execute on our strategy and the anticipated
benefits of such strategy;
- the ongoing impact of the legalization of additional cannabis
product types and forms for recreational use in Canada, including federal, provincial,
territorial and municipal regulations pertaining thereto, the
related timing and impact thereof and our intentions to participate
in such markets;
- expectations of the amount or frequency of impairment losses,
including as a result of the write-down of intangible assets,
including goodwill;
- 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.
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; 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; 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 associated with jointly
owned investments; risks relating to our current and future
operations in emerging markets; future levels of revenues and the
impact of increasing levels of competition; risks related to the
protection and enforcement of our intellectual property rights; our
ability to manage disruptions in credit markets or changes to our
credit ratings; future levels of capital, environmental or
maintenance expenditures, general and administrative and other
expenses; the success or timing of completion of ongoing or
anticipated capital or maintenance projects; risks related to the
integration of acquired businesses; the timing and manner of the
legalization of cannabis in the United
States; business strategies, growth opportunities and
expected investment; the adequacy of our capital resources and
liquidity, including but not limited to, availability of sufficient
cash flow to execute our business plan (either within the expected
timeframe or at all); counterparty risks and liquidity risks that
may impact our ability to obtain loans and other credit facilities
on favorable terms; the potential effects of judicial, regulatory
or other proceedings, or threatened litigation or proceedings, on
our business, financial condition, results of operations and cash
flows; risks related to stock exchange restrictions; risks
associated with divestment and restructuring; volatility in and/or
degradation of general economic, market, industry or business
conditions; our exposure to risks related to an agricultural
business, including wholesale price volatility and variable product
quality; third-party transportation risks; compliance with
applicable environmental, economic, health and safety, energy and
other policies and regulations and in particular health concerns
with respect to vaping and the use of cannabis and U.S. hemp
products in vaping devices; the anticipated effects of actions of
third parties such as competitors, activist investors or federal,
state, provincial, territorial or local regulatory authorities,
self-regulatory organizations, plaintiffs in litigation or persons
threatening litigation; changes in regulatory requirements in
relation to our business and products; and the factors discussed
under the heading "Risk Factors" in the Company's Annual Report on
Form 10-K for the year ended March 31,
2022. 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, 2022
|
|
March 31, 2021
|
ASSETS
|
Current
assets:
|
|
|
|
|
Cash and
cash equivalents
|
|
$776,005
|
|
$1,154,653
|
Short-term
investments
|
|
595,651
|
|
1,144,563
|
Restricted
short-term investments
|
|
12,216
|
|
11,332
|
Amounts
receivable, net
|
|
96,443
|
|
92,435
|
Inventory
|
|
204,387
|
|
367,979
|
Prepaid
expenses and other assets
|
|
52,700
|
|
67,232
|
Total current
assets
|
|
1,737,402
|
|
2,838,194
|
Other financial
assets
|
|
800,328
|
|
708,167
|
Property, plant and
equipment
|
|
942,780
|
|
1,074,537
|
Intangible
assets
|
|
252,695
|
|
308,167
|
Goodwill
|
|
1,866,503
|
|
1,889,354
|
Other assets
|
|
15,342
|
|
5,061
|
Total
assets
|
|
$5,615,050
|
|
$6,823,480
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$64,270
|
|
$67,262
|
Other
accrued expenses and liabilities
|
|
75,278
|
|
100,813
|
Current
portion of long-term debt
|
|
9,296
|
|
9,827
|
Other
liabilities
|
|
64,054
|
|
106,428
|
Total current
liabilities
|
|
212,898
|
|
284,330
|
Long-term
debt
|
|
1,491,695
|
|
1,573,136
|
Deferred income tax
liabilities
|
|
15,991
|
|
21,379
|
Liability arising from
Acreage Arrangement
|
|
47,000
|
|
600,000
|
Warrant derivative
liability
|
|
26,920
|
|
615,575
|
Other
liabilities
|
|
190,049
|
|
107,240
|
Total
liabilities
|
|
1,984,553
|
|
3,201,660
|
Commitments and
contingencies
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
36,200
|
|
135,300
|
Canopy Growth
Corporation shareholders' equity:
|
|
|
|
|
Common
shares - $nil par value; Authorized - unlimited number of
shares;
Issued - 394,422,604 shares and 382,875,179 shares,
respectively
|
|
7,482,809
|
|
7,168,557
|
Additional
paid-in capital
|
|
2,519,766
|
|
2,415,650
|
Accumulated other comprehensive loss
|
|
(42,282)
|
|
(34,240)
|
Deficit
|
|
(6,370,337)
|
|
(6,068,156)
|
Total Canopy Growth
Corporation shareholders' equity
|
|
3,589,956
|
|
3,481,811
|
Noncontrolling
interests
|
|
4,341
|
|
4,709
|
Total
shareholders' equity
|
|
3,594,297
|
|
3,486,520
|
Total
liabilities and shareholders' equity
|
|
$5,615,050
|
|
$6,823,480
|
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,
|
|
Years ended
March 31,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenue
|
|
$126,123
|
|
$167,375
|
|
$582,218
|
|
$607,198
|
Excise taxes
|
|
14,353
|
|
18,936
|
|
61,893
|
|
60,549
|
Net
revenue
|
|
111,770
|
|
148,439
|
|
520,325
|
|
546,649
|
Cost of goods
sold
|
|
271,012
|
|
138,639
|
|
713,379
|
|
479,689
|
Gross
margin
|
|
(159,242)
|
|
9,800
|
|
(193,054)
|
|
66,960
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
|
117,591
|
|
148,666
|
|
472,756
|
|
575,389
|
Share-based compensation
|
|
11,669
|
|
18,517
|
|
47,525
|
|
91,149
|
Expected
credit losses on financial assets and related charges
|
|
-
|
|
1,000
|
|
-
|
|
109,480
|
Asset
impairment and restructuring costs
|
|
241,141
|
|
74,819
|
|
369,339
|
|
534,398
|
Total operating expenses
|
|
370,401
|
|
243,002
|
|
889,620
|
|
1,310,416
|
Operating
loss
|
|
(529,643)
|
|
(233,202)
|
|
(1,082,674)
|
|
(1,243,456)
|
Loss from
equity method investments
|
|
-
|
|
(11,778)
|
|
(100)
|
|
(52,629)
|
Other
income (expense), net
|
|
(57,428)
|
|
(366,770)
|
|
753,341
|
|
(387,876)
|
Loss before income
taxes
|
|
(587,071)
|
|
(611,750)
|
|
(329,433)
|
|
(1,683,961)
|
Income tax
recovery (expense)
|
|
8,458
|
|
(4,945)
|
|
8,948
|
|
13,141
|
Net loss
|
|
(578,613)
|
|
(616,695)
|
|
(320,485)
|
|
(1,670,820)
|
Net (loss)
income attributable to noncontrolling interests and
redeemable noncontrolling interest
|
|
(3,997)
|
|
83,283
|
|
(18,304)
|
|
74,100
|
Net loss attributable
to Canopy Growth Corporation
|
|
$(574,616)
|
|
$(699,978)
|
|
$(302,181)
|
|
$(1,744,920)
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss
per share
|
|
$(1.46)
|
|
$(1.85)
|
|
$(0.77)
|
|
$(4.69)
|
Basic and diluted
weighted average common shares outstanding
|
|
394,248,404
|
|
378,519,753
|
|
391,324,285
|
|
371,662,296
|
Schedule 3
CANOPY GROWTH
CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands of
Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
Years ended
March 31,
|
|
|
2022
|
|
2021
|
Cash flows from
operating activities:
|
|
|
|
|
Net
loss
|
|
$(320,485)
|
|
$(1,670,820)
|
Adjustments to reconcile net loss to net cash used in
operating activities:
|
|
|
|
|
Depreciation of property, plant and equipment
|
|
76,247
|
|
70,914
|
Amortization of intangible assets
|
|
38,171
|
|
56,204
|
Share of loss on equity method investments
|
|
100
|
|
52,629
|
Share-based compensation
|
|
47,525
|
|
91,149
|
Asset impairment and restructuring costs
|
|
332,949
|
|
519,209
|
Expected credit losses on financial assets and related
charges
|
|
-
|
|
109,480
|
Income tax recovery
|
|
(8,948)
|
|
(13,141)
|
Non-cash fair value adjustments
|
|
(866,739)
|
|
380,758
|
Change in operating assets and liabilities, net of effects
from
purchases of businesses:
|
|
|
|
|
Amounts receivable
|
|
3,741
|
|
(11,994)
|
Inventory
|
|
173,189
|
|
23,107
|
Prepaid expenses and other assets
|
|
24,472
|
|
77
|
Accounts payable and accrued liabilities
|
|
(35,844)
|
|
16,542
|
Other, including non-cash foreign currency
|
|
(10,189)
|
|
(89,843)
|
Net cash used in
operating activities
|
|
(545,811)
|
|
(465,729)
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases
of and deposits on property, plant and equipment
|
|
(36,684)
|
|
(164,502)
|
Purchases
of intangible assets
|
|
(11,429)
|
|
(9,639)
|
Proceeds
on sale of property, plant and equipment
|
|
27,279
|
|
45,921
|
Proceeds
on sale of intangible assets
|
|
-
|
|
18,337
|
Redemption
(purchases) of short-term investments
|
|
545,991
|
|
(459,834)
|
Cash
outflow on completion of RIV Arrangement
|
|
-
|
|
(152,801)
|
Net cash
proceeds on sale of subsidiaries
|
|
118,149
|
|
-
|
Sale of
equity method investments
|
|
-
|
|
7,000
|
Investment
in other financial assets
|
|
(379,414)
|
|
(44,721)
|
Investment
in Acreage Arrangement
|
|
-
|
|
(49,849)
|
Loan
advanced to Acreage Hempco
|
|
-
|
|
(66,995)
|
Net cash
outflow on acquisition of subsidiaries
|
|
(14,947)
|
|
-
|
Other
investing activities
|
|
(18,126)
|
|
(7,022)
|
Net cash provided by
(used in) investing activities
|
|
230,819
|
|
(884,105)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds
from issuance of common shares and warrants
|
|
2,700
|
|
-
|
Proceeds
from exercise of stock options
|
|
5,567
|
|
156,897
|
Proceeds
from exercise of warrants
|
|
-
|
|
245,186
|
Issuance
of long-term debt
|
|
-
|
|
893,160
|
Repayment
of long-term debt
|
|
(50,763)
|
|
(15,619)
|
Other
financing activities
|
|
(3,037)
|
|
(14,855)
|
Net cash (used in)
provided by financing activities
|
|
(45,533)
|
|
1,264,769
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
(18,123)
|
|
(63,458)
|
Net
decrease in cash and cash equivalents
|
|
(378,648)
|
|
(148,523)
|
Cash and
cash equivalents, beginning of period
|
|
1,154,653
|
|
1,303,176
|
Cash and cash
equivalents, end of period
|
|
$776,005
|
|
$1,154,653
|
Schedule 4
Adjusted Gross Margin1 Reconciliation (Non-GAAP
Measure)
|
|
Three months ended
March 31,
|
(in thousands of
Canadian dollars except where indicated; unaudited)
|
|
2022
|
|
2021
|
Net revenue
|
|
$111,770
|
|
$148,439
|
|
|
|
|
|
Gross margin, as
reported
|
|
(159,242)
|
|
9,800
|
Adjustments to gross
margin:
|
|
|
|
|
Restructuring costs recorded in cost of good sold
|
|
119,115
|
|
10,348
|
Charges
related to the flow-through of inventory
step-up on business combinations
|
|
4,163
|
|
-
|
Adjusted gross
margin1
|
|
$(35,964)
|
|
$20,148
|
|
|
|
|
|
Adjusted gross margin
percentage1
|
|
(32%)
|
|
14%
|
|
|
Years ended March
31,
|
(in thousands of
Canadian dollars except where indicated; unaudited)
|
|
2022
|
|
2021
|
Net revenue
|
|
$520,325
|
|
$546,649
|
|
|
|
|
|
Gross margin, as
reported
|
|
(193,054)
|
|
66,960
|
Adjustments to gross
margin:
|
|
|
|
|
Restructuring costs recorded in cost of good sold
|
|
123,669
|
|
25,985
|
Charges
related to the flow-through of inventory
step-up on business combinations
|
|
11,847
|
|
1,494
|
Adjusted gross
margin1
|
|
$(57,538)
|
|
$94,439
|
|
|
|
|
|
Adjusted gross margin
percentage1
|
|
(11%)
|
|
17%
|
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
March 31,
|
(in thousands of
Canadian dollars, unaudited)
|
|
2022
|
|
2021
|
Net loss
|
|
$(578,613)
|
|
$(616,695)
|
Income tax
(recovery) expense
|
|
(8,458)
|
|
4,945
|
Other
(income) expense, net
|
|
57,428
|
|
366,770
|
Loss on
equity method investments
|
|
-
|
|
11,778
|
Share-based compensation2
|
|
11,669
|
|
18,517
|
Acquisition-related costs
|
|
1,272
|
|
5,561
|
Depreciation and amortization2
|
|
30,489
|
|
28,928
|
Asset
impairment and restructuring costs
|
|
241,141
|
|
74,819
|
Expected
credit losses on financial assets
and related charges
|
|
-
|
|
1,000
|
Restructuring costs recorded in cost of goods sold
|
|
119,115
|
|
10,348
|
Charges
related to the flow-through of inventory
step-up on business combinations
|
|
4,163
|
|
-
|
Adjusted
EBITDA1
|
|
$(121,794)
|
|
$(94,029)
|
|
|
Years ended March
31,
|
(in thousands of
Canadian dollars, unaudited)
|
|
2022
|
|
2021
|
Net loss
|
|
$(320,485)
|
|
$(1,670,820)
|
Income tax
recovery
|
|
(8,948)
|
|
(13,141)
|
Other
(income) expense, net
|
|
(753,341)
|
|
387,876
|
Loss on
equity method investments
|
|
100
|
|
52,629
|
Share-based compensation2
|
|
47,525
|
|
91,149
|
Acquisition-related costs
|
|
11,060
|
|
13,522
|
Depreciation and amortization2
|
|
114,418
|
|
127,118
|
Asset
impairment and restructuring costs
|
|
358,708
|
|
534,398
|
Expected
credit losses on financial assets
and related charges
|
|
-
|
|
109,480
|
Restructuring costs recorded in cost of goods sold
|
|
123,669
|
|
25,985
|
Charges
related to the flow-through of inventory
step-up on business combinations
|
|
11,847
|
|
1,494
|
Adjusted
EBITDA1
|
|
$(415,447)
|
|
$(340,310)
|
1Adjusted
EBITDA is a non-GAAP measure. See "Non-GAAP Measures".
|
2 From
Consolidated Statements of Cash Flows.
|
|
|
|
|
Schedule 6
Free Cash Flow Reconciliation1 (Non-GAAP
Measure)
|
|
Three months ended
March 31,
|
(in thousands of
Canadian dollars, unaudited)
|
|
2022
|
|
2021
|
Net cash used in
operating activities
|
|
$(126,686)
|
|
$(97,830)
|
Purchases of and
deposits on property, plant and equipment
|
|
(64)
|
|
(26,525)
|
Free cash
flow1
|
|
$(126,750)
|
|
$(124,355)
|
|
|
Years ended March
31,
|
(in thousands of
Canadian dollars, unaudited)
|
|
2022
|
|
2021
|
Net cash used in
operating activities
|
|
$(545,811)
|
|
$(465,729)
|
Purchases of and
deposits on property, plant and equipment
|
|
(36,684)
|
|
(164,502)
|
Free cash
flow1
|
|
$(582,495)
|
|
$(630,231)
|
1Free cash
flow is a non-GAAP measure. See "Non-GAAP Measures".
|
Schedule 7
Segmented Gross Margin Reconciliation
|
|
Three months ended
March 31,
|
(in thousands of
Canadian dollars, unaudited)
|
|
2022
|
|
2021
|
Global cannabis
segment
|
|
|
|
|
Net
revenue
|
|
$65,975
|
|
$101,276
|
Cost of
goods sold
|
|
236,778
|
|
106,830
|
Gross
margin
|
|
(170,803)
|
|
(5,554)
|
Gross
margin percentage
|
|
(259%)
|
|
(5%)
|
|
|
|
|
|
Other consumer
products segment
|
|
|
|
|
Revenue
|
|
$45,795
|
|
$47,163
|
Cost of
goods sold
|
|
34,234
|
|
31,809
|
Gross
margin
|
|
11,561
|
|
15,354
|
Gross
margin percentage
|
|
25%
|
|
33%
|
|
|
Years ended March
31,
|
(in thousands of
Canadian dollars, unaudited)
|
|
2022
|
|
2021
|
Global cannabis
segment
|
|
|
|
|
Net
revenue
|
|
$337,216
|
|
$378,680
|
Cost of
goods sold
|
|
588,451
|
|
371,635
|
Gross
margin
|
|
(251,235)
|
|
7,045
|
Gross
margin percentage
|
|
(75%)
|
|
2%
|
|
|
|
|
|
Other consumer
products segment
|
|
|
|
|
Revenue
|
|
$183,109
|
|
$167,969
|
Cost of
goods sold
|
|
124,928
|
|
108,054
|
Gross
margin
|
|
58,181
|
|
59,915
|
Gross
margin percentage
|
|
32%
|
|
36%
|
Schedule 8
Segmented Adjusted Gross Margin1 Reconciliation
(Non-GAAP Measure)
|
|
Three months ended
March 31,
|
(in thousands of
Canadian dollars except where indicated; unaudited)
|
2022
|
|
2021
|
Global cannabis
segment
|
|
|
|
|
Net revenue
|
|
$65,975
|
|
$101,276
|
|
|
|
|
|
Gross margin, as
reported
|
|
(170,803)
|
|
(5,554)
|
Adjustments to gross
margin:
|
|
|
|
|
Restructuring costs recorded in cost of good sold
|
|
119,115
|
|
10,348
|
Charges
related to the flow-through of inventory
step-up on business combinations
|
|
4,163
|
|
-
|
Adjusted gross
margin1
|
|
$(47,525)
|
|
$4,794
|
|
|
|
|
|
Adjusted gross margin
percentage1
|
|
(72%)
|
|
5%
|
|
|
|
|
|
Other consumer
products segment
|
|
|
|
|
Revenue
|
|
$45,795
|
|
$47,163
|
|
|
|
|
|
Gross margin, as
reported
|
|
11,561
|
|
15,354
|
|
|
|
|
|
Adjusted gross
margin1
|
|
$11,561
|
|
$15,354
|
|
|
|
|
|
Adjusted gross margin
percentage1
|
|
25%
|
|
33%
|
1 Adjusted
gross margin and adjusted gross margin percentage are non-GAAP
measures. See "Non-GAAP Measures".
|
|
|
Years ended March
31,
|
(in thousands of
Canadian dollars except where indicated; unaudited)
|
2022
|
|
2021
|
Global cannabis
segment
|
|
|
|
|
Net revenue
|
|
$337,216
|
|
$378,680
|
|
|
|
|
|
Gross margin, as
reported
|
|
(251,235)
|
|
7,045
|
Adjustments to gross
margin:
|
|
|
|
|
Restructuring costs recorded in cost of good sold
|
|
123,669
|
|
25,985
|
Charges
related to the flow-through of inventory
step-up on business combinations
|
|
11,847
|
|
-
|
Adjusted gross
margin1
|
|
$(115,719)
|
|
$33,030
|
|
|
|
|
|
Adjusted gross margin
percentage1
|
|
(34%)
|
|
9%
|
|
|
|
|
|
Other consumer
products segment
|
|
|
|
|
Revenue
|
|
$183,109
|
|
$167,969
|
|
|
|
|
|
Gross margin, as
reported
|
|
58,181
|
|
59,915
|
Adjustments to gross
margin:
|
|
|
|
|
Charges
related to the flow-through of inventory
step-up on business combinations
|
|
-
|
|
1,494
|
Adjusted gross
margin1
|
|
$58,181
|
|
$61,409
|
|
|
|
|
|
Adjusted gross margin
percentage1
|
|
32%
|
|
37%
|
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