Business transformation and cost reduction actions initiated
in FY2023 expected to drive overall cost reduction of $240-$310 million
by the end of FY2024
Actions to strengthen balance sheet have reduced overall debt
position by approximately $500
million from Q2 FY2023 to quarter-to-date in Q1 FY2024
and are anticipated to generate proceeds of up to $150 million from facility divestitures by the
end of Q2 FY2024
Revised proxy statement filed with modifications to the
structure of Canopy USA in order
to maintain compliance with NASDAQ listing requirements while
preserving strategic benefits
SMITHS
FALLS, ON, June 22, 2023 /PRNewswire/ - Canopy
Growth Corporation ("Canopy Growth" or the
"Company") (TSX: WEED) (NASDAQ: CGC) today announced its
financial results for the fourth quarter and fiscal year ended
March 31, 2023 and the filing of an
annual report on Form 10-K, including the audited consolidated
financial statements for the fiscal year ended March 31, 2023 and the unqualified report thereon
of the Company's independent registered public accounting firm. All
financial information in this press release is reported in Canadian
dollars, unless otherwise indicated.
Highlights
- In FY2023, the Company announced a series of comprehensive
steps to align its Canadian cannabis operations and resources
including: (i) the divestiture of the Company's national cannabis
retail operations (completed in Q3 FY2023); (ii) ceasing the
sourcing of cannabis flower from the Mirabel, Quebec facility (completed in Q4
FY2023); (iii) exiting cannabis flower cultivation in the
Smiths Falls, Ontario facility
(expected to be completed in Q1 FY2024); (iv) consolidating
cultivation at its existing facilities in Kincardine, Ontario and Kelowna, British Columbia; and (v) moving to
an adaptive third-party sourcing model for all cannabis beverages,
edibles, vapes, and extracts which will enable the Company to
select and bring to market exciting and exclusive formats without
the required investment in research and development and production
footprint.
- Restructuring steps undertaken in FY2023 reduced Selling,
General & Administrative ("SG&A") expenses and Cost of
Goods Sold ("COGS") by a combined $125
million through the end of FY2023.
- The Company's FY2023 net revenue decreased 21% year-over year
to $403 million. When adjusting for
the impact of the divestiture of C3 in Q4 FY2022 and our
Canadian retail business in Q3 FY2023, revenues decreased 11% in
FY2023 as compared to FY2022.
- Canadian medical cannabis revenue in FY2023 increased 6%
year-over-year and Q4 FY2023 increased 8% year-over-year in a
declining market.
- Enhanced flower quality drove resurgence of the Company's
mainstream Tweed brand to #9 spot in the Canadian adult-use market
in Q4 FY2023 up from #16 in prior year1.
- Subsequent to quarter-end, the Company entered into an
agreement with Indiva Limited that gives Canopy Growth control
of all distribution, marketing, and sales of industry leading Wana
branded products in Canada. The
addition of Wana branded gummies is expected to drive Adjusted
EBITDA improvement for the Company's Canadian cannabis business and
advance its path to leadership in the edibles category in
Canada.
"Fiscal 2023 was a transformational year for Canopy Growth as we
began to implement a comprehensive strategy to accelerate our path
to profitability, and position our business to realize the
tremendous opportunities ahead. Our actions are already yielding
results and we expect to realize significant benefits from our cost
reduction program in Fiscal 2024. Paired with continued progress in
our Canopy USA strategy which
enables a fast start, the Company is well positioned as it strives
towards its goal of long-term North American cannabis
leadership.''
David Klein, Chief Executive
Officer
"Our actions throughout Fiscal 2023 have streamlined the
organization, reduced costs, and eliminated a significant portion
of Canopy Growth's debt. We recognize there is more work to be
done, and we have several initiatives already underway to further
reduce the operating cash burn in the businesses and improve our
balance sheet, including facility divestitures that are anticipated
to generate proceeds of up to $150
million in Fiscal 2024."
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 third-party data
providers and government agencies.
|
BioSteel Review and Remedial Actions
In connection with the preparation of our financial statements
for our Annual Report on Form 10-K for the fiscal year ended
March 31, 2023 (the "Form 10-K"), we identified certain
trends in the BioSteel Sports Nutrition Inc. ("BioSteel") business
unit. With the oversight of the Audit Committee, we launched an
internal review, together with independent external counsel and
forensic accountants.
This review identified material misstatements in certain of our
prior financial statements related to certain sales in the BioSteel
business unit, particularly with respect to the timing and amount
of revenue recognition. The review also identified material
weaknesses in the Company's internal control over financial
reporting as of March 31, 2023.
Overall, the correction resulted in a decrease of approximately
$10 million in net revenue for
FY2022, or approximately 2% of total net revenue for the
Company. For the nine months ended December 31, 2022, the correction resulted in a
decrease of approximately $14 million
in net revenue, or approximately 4% of total consolidated revenue
for the Company.
As a result of the review, we are continuing to implement
several remedial actions, including management changes and
appropriate personnel actions. The Company is also considering all
legal options that may be available in connection with the
associated overpayment made in FY2023 to the minority shareholders
of BioSteel as a result of the overstatement of revenues.
Additionally, Canopy Growth has taken decisive actions to
sustain growth and improve profitability of BioSteel including: (i)
exiting all BioSteel international business; (ii) prioritizing
resources towards the growing Canadian market; (iii) refining our
market strategy in the U.S.; (iv) changes to the BioSteel
business including cost reductions in warehousing, production,
product sampling and overall staffing reductions; and (v) exploring
additional options to further minimize operating cash burn.
Balance Sheet and Liquidity
The Company ended FY2023 with cash, cash equivalents and
short-term investments of $783
million. Targeted actions that have been completed or are
currently underway to further strengthen our balance sheet
include:
- Reduction of approximately $500
million in debt from Q2 FY2023 to quarter-to-date in Q1
FY2024, including the equitization of $267 million of the 4.25% unsecured notes due in
July 2023 (the "2023 Notes") and a
paydown of USD$188 million of the
senior secured term loan at $0.93 per
dollar of debt, which has reduced annual interest payments by
approximately $45 million;
- Refinancing $100 million of the
2023 Notes held by Greenstar Canada Investment Limited
Partnership, a wholly-owned subsidiary of Constellation Brands,
Inc. ("CBI") in order to extend the maturity date to December 31, 2024. The Company maintains its
intention to negotiate an exchange to purchase the 2023 Notes held
by CBI in exchange for shares prior to its maturity; and
- Facility divestitures which are expected to generate proceeds
of up to $150 million by the end of
September 2023. In the first quarter,
the Company has already received proceeds of approximately
$56 million in transactions that
closed subsequent to March 31, 2023.
Under provisions of the senior secured term loan agreement, 50% of
proceeds will be used to paydown outstanding amounts of the
senior secured term loan.
FY2024 Outlook and Priorities
To advance our goal of becoming a leading premium cannabis
branded company in North America,
Canopy Growth will focus on the following in FY2024:
- Achieving breakeven to positive adjusted EBITDA in all of
our businesses, with the exception of BioSteel, by end of
FY2024;
- Strengthening our balance sheet and improving liquidity;
and
- Monitoring and supporting the creation of value in Canopy
USA, LLC ("CUSA").
Fourth Quarter FY2023 Financial Summary
(in millions of Canadian
dollars, unaudited)
|
Net Revenue
|
Gross margin
percentage
|
Adjusted
gross margin
percentage3
|
Net loss
|
Adjusted
EBITDA4
|
Free cash
flow5
|
|
Reported
|
$87.5
|
(103 %)
|
(18 %)
|
$(647.6)
|
$(95.6)
|
$(142.8)
|
vs. Q4
FY20222
|
(14 %)
|
6,300 bps
|
2,700 bps
|
(10 %)
|
27 %
|
(13 %)
|
FY2023 Financial Summary
(in millions of Canadian
dollars, unaudited)
|
Net Revenue
|
Gross margin
percentage
|
Adjusted
gross margin
percentage6
|
Net loss
|
Adjusted
EBITDA
|
Free cash
flow
|
|
Reported
|
$402.9
|
(26 %)
|
(3 %)
|
$(3,309.5)
|
$(349.7)
|
$(566.8)
|
vs.
FY20222
|
(21 %)
|
1,400 bps
|
1,000 bps
|
901 %
|
18 %
|
3 %
|
_____________________
|
2
Restated
|
3 Adjusted
gross margin is a non-GAAP measure, and for Q4 FY2023 excludes $75
million of restructuring costs recorded in COGS (Q4 FY2022 -
excludes $4.2 million related to the flow-through of inventory
step-up associated with the acquisition of Supreme Cannabis and
$119 million of restructuring costs recorded in COGS). See
"Non-GAAP Measures" and Schedule 4 for a reconciliation of net
revenue to adjusted gross margin.
|
4 Adjusted
EBITDA is a non-GAAP measure. See "Non-GAAP Measures" and Schedule
5 for a reconciliation of net loss to adjusted EBITDA.
|
5 Free cash
flow is a non-GAAP measure. See "Non-GAAP Measures" and Schedule 6
for a reconciliation of net cash used in operating activities to
free cash flow.
|
6 Adjusted
gross margin is a non-GAAP measure, and for FY2023 excludes $90
million of restructuring costs recorded in cost of goods sold
(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). See "Non-GAAP Measures" and Schedule 4 for a
reconciliation of net revenue to adjusted gross
margin.
|
Business Highlights
Transformation of Canadian cannabis operations to
asset-light model and expected cost reductions are on
track
- Since FY2020, the Company has closed 10 production sites in
Canada and is on track to end
production at its 1 Hershey Drive, Smiths
Falls, Ontario facility by the end of Q1 FY2024.
- Cost reduction initiatives undertaken in FY2023 are on track to
reduce the Company's headcount by over 1200 positions.
During a year of significant business change and continued
market fragmentation, Canopy Growth's Canadian cannabis business
stabilized exiting FY2023
- The Company's Canadian medical cannabis revenue in Q4 FY2023
increased 8% year-over-year in a declining market and Canadian
adult-use cannabis Business-to-business revenue in Q4 FY2023
increased slightly over Q3 FY2023.
- Canadian adult-use cannabis performance was aided by the
resurgence of the Company's mainstream Tweed brand. The resurgence
was driven by strong consumer demand for new, high-quality
Tweed Kush Mints and Tweed Tiger Cake flower and PRJ product
offerings.
FY2024 focus on continued stabilization of Canadian
adult-use cannabis business expected to be driven by new,
high-quality flower and pre-rolled joints as well as a stronger
edibles portfolio
- Leveraging our experience with the resurgence of the Tweed
brand in FY2023, the Company's focus on enhancing flower quality is
expected to improve the competitive positioning of our
premium Doja and 7ACRES branded product offerings.
- Focused on reestablishing the growth of the Wana brand in the
Canadian market and bringing Wana's innovation across the United States into the Canadian market,
including, for instance, Wana's new passionfruit pineapple 1:1:1
(CBG/CBD/THC) gummy, a low dose product perfect for relaxing, which
will soon be available in Ontario,
BC, and Alberta.
Focusing BioSteel in North
America, advancing innovation at Storz & Bickel to drive
growth
- BioSteel is continuing to gain market share in Canada, including through its high visibility
NHL partnerships and has reached an 11.2% share of convenience and
gas channel in Canada7
in Q4 FY2023, up from 3.4% in the prior year. In FY2024,
the BioSteel business is focused on expanding distribution in
the food, drug, and mass channels and club accounts across
Canada.
- BioSteel All-Commodity Volume in the U.S. of 37.7% in Q4
FY20238, up from 18.9% in the prior year. The Company is refining
BioSteel's U.S. market strategy with a tighter geographical focus
as well as sharper emphasis on the specialty retail channel.
- Storz & Bickel has enhanced its U.S commercial strategy and
is focused on driving improved growth with a planned launch of new
Storz & Bickel vaporizers in FY2024.
CUSA strategy advancing and expected to accelerate entry
into the U.S. cannabis market
- Subsequent to quarter end, the Company filed a revised proxy
statement related to the Company's strategy to accelerate entry
into the U.S. cannabis market through its interest in CUSA and
realize the opportunity of the world's largest cannabis market.
- In order to ensure continued compliance with NASDAQ's
listing rules, Canopy Growth has modified the structure of the
Company's interest in CUSA such that it is not expected to be
required to consolidate the financial results of CUSA with the
Company's financial statements in accordance with generally
accepted accounting principles in the
United States.
- The Company is focused on concluding the regulatory review and
filing a definitive proxy statement related to CUSA in order
to finalize the date for the special meeting of shareholders to
authorize the creation of a new class of non-voting exchangeable
shares in the capital of the Company (the "Exchangeable
Shares").
U.S. THC companies continue to strengthen and expand their
businesses
- Acreage9 reported Q1 FY2023 revenue of USD
$56 million. In Q1 FY2023, Acreage
began adult-use retail operations in Connecticut and secured approval to locate an
adult-use dispensary in Pennsauken, New Jersey. Acreage anticipates commencing
adult-use sales at the new Pennsauken location before the end
of 2023.
- In the three months ended March
31, 2023, Wana Brands10 launched 19 SKUs in
8 markets including the launch in Colorado of Wana Optimals Quick Calm, a
groundbreaking product offering a calming, typically
non-intoxicating cannabinoid-terpene blend for fast-acting relief
from anxious feelings.
- In the three months ended March 31,
2023, Jetty11 expanded to the state of
New York with products offered at
two New York City dispensaries,
Housing Works Cannabis Company and Union Square Travel Agency.
Jetty also maintained its position as the #1 Solventless vape
in California12 in
addition to fully staffing its California sales team to provide coverage of
over 500 retail accounts.
_________________
|
7 Nielsen
data 13-weeks ended April 1, 2023.
|
8 IRI data
for the 13 weeks ended April 2, 2023.
|
9 Until such
time as the rights to acquire Acreage are exercised, neither the
Company nor CUSA will have any direct or indirect economic or
voting interests in Acreage, neither the Company nor CUSA will
directly or indirectly control Acreage, and each of the Company,
CUSA and Acreage will continue to operate independently of one
another. The Company holds non-voting and non-participating shares
in CUSA that are exchangeable into common shares of
CUSA.
|
10 Until
such time as CUSA elects to exercise its rights to acquire Mountain
High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC
(collectively, "Wana"), CUSA will have no direct or indirect
economic or voting interests in Wana, CUSA will not directly or
indirectly control Wana, and CUSA, 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 CUSA that are exchangeable into common shares of
CUSA.
|
11 Until
such time as CUSA elects to exercise its rights to acquire
Lemurian, Inc. ("Jetty"), CUSA will have no direct or indirect
economic or voting interests in Jetty, CUSA will not directly or
indirectly control Jetty, and CUSA, 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 CUSA that are exchangeable into common shares of
CUSA.
|
12 Based on
April 2023 BDS Analytics Inc. data.
|
Fourth Quarter and FY2023 Financial Summary
Revenues:
Net revenue of $88 million in Q4
FY2023 declined 14% as compared to Q4 FY2022 with the decrease
primarily attributable to the divestitures of C3
Cannabinoid Compound Company GmbH ("C³") in the fourth quarter of
FY2022 and the Canadian business-to-consumer cannabis business in
the third quarter of FY2023, as well the impacts of increased
competition in the Canadian adult use cannabis market and softer
performance from Storz & Bickel and This Works. When adjusting
for the impact of the divestiture of our Canadian retail business,
Canadian cannabis revenues for the period decreased 8% in Q4 FY2023
as compared to Q4 FY2022, and were stable compared to Q3
FY2023.
Net revenue of $403 million in
FY2023 declined 21% as compared to FY2022. The decrease is
primarily attributable to increased competition in the Canadian
adult-use cannabis market, the divestitures of C³ and the Canadian
business-to-consumer cannabis business, and softer performance from
Storz & Bickel and This Works. These decreases were partially
offset by growth of our BioSteel business in the Canadian
market.
Gross Margin:
Reported gross margin in Q4 FY2023 was (103%) as compared to
(166%) in Q4 FY2022. Excluding non-cash restructuring costs and
inventory write-downs associated with the Company's strategic
changes recorded in COGS for a total of $75
million, adjusted gross margin was (18%). Adjusted gross
margin during Q4 FY2023 was negatively impacted by higher inventory
write-downs and charges relating to costs associated with certain
contract manufacturing agreements that are not expected to recur
past FY2023 in the BioSteel business unit.
Reported gross margin in FY2023 was (26%) as compared to (40%)
in FY2022. Excluding non-cash restructuring costs recorded in COGS
of $90 million, adjusted gross margin
was (3%) in FY2023. Adjusted gross margin during FY2023 was
negatively impacted by higher inventory write-downs and charges
relating to costs associated with certain contract manufacturing
agreements that are not expected to recur past FY2023 in the
BioSteel business unit.
Operating Expenses:
Total SG&A expenses in Q4 FY2023 declined by 11% as compared
to Q4 FY2022, driven by year-over-year decreases in general and
administrative ("G&A"), research and development ("R&D") as
well as depreciation and amortization expenses. These decreases
were primarily due to the restructuring actions announced in
April 2022 and February 2023. Partially offsetting these
decreases were an increase in BioSteel sales and marketing
expenses, relating to the activation of the National Hockey League
("NHL") partnership announced in July
2022 and other BioSteel sales and marketing activities, as
well as acquisition-related costs. Excluding acquisition–related
expenses, the impact of the disposition of C3 in the
fourth quarter of FY2022 and the disposition of the Canadian retail
business in the Q3 FY2023, as well as the COVID-19 relief program,
total SG&A expenses decreased 13% in Q4 FY2023 compared to the
prior year period.
Total SG&A expenses in FY2023 declined by 3% as compared to
FY2022, driven by year-over-year decreases in G&A, R&D as
well as depreciation and amortization expenses. These decreases
were primarily due to the restructuring actions announced in
April 2022 and February 2023. Partially offsetting these
decreases were an increase in BioSteel sales and marketing
expenses, relating to the activation of the NHL partnership
announced in July 2022 and other
BioSteel sales and marketing activities, as well as
acquisition-related costs. Excluding acquisition–related expenses,
the impact of the disposition of C3 in the fourth
quarter of FY2022 and the disposition of the Canadian retail
business in the third quarter of FY2023, as well as the COVID-19
relief program, total SG&A expenses decreased 8% in FY2023
compared to the prior year.
Net Loss:
Net Loss in Q4 FY2023 was $648
million, which is a $59
million increase as compared to Q4 FY2022, driven primarily
by an increase in asset impairment and restructuring costs of
$164 million partially offset by
improved gross margins.
Net Loss in FY2023 was $3,310
million, which is a $2,979
million increase as compared to FY2022, driven primarily by
a $1,887 million increase in asset
impairment and restructuring costs primarily related to goodwill
impairment losses associated with the Company's cannabis operations
reporting unit, as well as a $1,219
million primarily related to the impact of non-cash fair
value changes partially offset by improved gross margins.
Adjusted EBITDA:
Adjusted EBITDA loss in Q4 FY2023 was $96
million, a $36 million
improvement in Adjusted EBITDA loss as compared to Q4 FY2022
primarily driven by the year-over-year improvement in gross margin
and reduced operating expenses.
Adjusted EBITDA loss in FY2023 was $350
million, a $76 million
improvement in Adjusted EBITDA loss as compared to FY2022 primarily
driven by the year-over-year improvement in gross margin and
reduced operating expenses inclusive of the impact of a
$64 million reduction in COVID-19 relief payments in FY2023 as
compared to FY2022.
Free Cash Flow:
Free Cash Flow in Q4 FY2023 was an outflow of $143 million, a 13% increase in outflow as
compared to Q4 FY2022. Relative to Q4 FY2022, the increase in
outflow is due to the timing of certain payments in each period and
investments in growth initiatives at BioSteel and costs related to
the formation of CUSA, partially offset by reduced capital
expenditures and impacts of cost reduction actions.
Free Cash Flow in FY2023 was an outflow of $567 million, a 3% decrease in outflow as
compared to FY2022. Relative to FY2022, the decrease in outflow is
due to the timing of certain payments in each period, reduced
capital expenditures and impacts of cost reduction actions,
partially offset investments in growth initiatives at BioSteel and
costs related to the formation of CUSA.
Cash Position:
Cash and short-term investments were $783
million at March 31, 2023,
representing a decrease of $589
million from $1,372 million at March 31, 2022 reflecting the impact of cash used
in operating activities, the first tranche of the term loan credit
agreement repayment of $118 million,
as well as cash used for acquisitions and investments, including
the acquisition of the Verona,
Virginia manufacturing facility for the BioSteel business
and a premium payment made to obtain an option to acquire Acreage
Holdings, Inc. ("Acreage") outstanding debt in connection with the
formation of CUSA in October 2022.
Partially offsetting these net outflows were net proceeds of
$135 million from the issuance of
USD$100 million in convertible
debentures in February 2023. Debt
amounted to $1,307 million at
March 31, 2023, representing a
decline of $194 million from
$1,501 million at March 31, 2022. Subsequent to March 31, 2023, $127
million of debt owing under the credit facility was repaid
at $0.93 cents on the dollar for
$117 million, and $100 million of the 2023 Notes were settled
through the issuance of a promissory note due at the end of the
third quarter of FY2025.
Fourth Quarter FY2023 Revenue Review13
Revenue by Channel
(in millions of
Canadian dollars,
unaudited)
|
|
Q4
FY2023
|
Q4
FY2022
|
Vs. Q4
FY2022
|
FY2023
|
FY2022
|
Vs.
FY2022
|
|
|
|
(As
Restated)
|
|
|
(As
Restated)
|
|
Canada
cannabis
|
|
|
|
|
|
|
|
Canadian adult-use
cannabis
|
|
|
|
|
|
|
|
Business-to-business14
|
|
$21.6
|
$25.8
|
(16 %)
|
$95.0
|
$143.7
|
(34 %)
|
Business-to-consumer
|
|
$-
|
$13.1
|
(100 %)
|
$36.3
|
$61.6
|
(41 %)
|
|
|
$21.6
|
$38.9
|
(44 %)
|
$131.3
|
$205.3
|
(36 %)
|
Canadian medical
cannabis15
|
|
$14.1
|
$13.1
|
8 %
|
$55.8
|
$52.6
|
6 %
|
|
|
$35.7
|
$52.0
|
(31 %)
|
$187.1
|
$257.9
|
(27 %)
|
Rest-of-world
cannabis
|
|
|
|
|
|
|
|
C3
|
|
$-
|
$3.1
|
(100 %)
|
$-
|
$36.1
|
(100 %)
|
Other rest-of-world
cannabis16
|
|
$8.8
|
$10.8
|
(19 %)
|
$39.0
|
$43.2
|
(10 %)
|
|
|
$8.8
|
$13.9
|
(37 %)
|
$39.0
|
$79.3
|
(51 %)
|
|
|
|
|
|
|
|
|
Storz &
Bickel
|
|
$15.5
|
$21.6
|
(28 %)
|
$64.8
|
$85.4
|
(24 %)
|
BioSteel17
|
|
$19.3
|
$3.5
|
NM
|
$69.6
|
$34.6
|
101 %
|
This
Works
|
|
$5.4
|
$6.0
|
(10 %)
|
$26.0
|
$32.3
|
(20 %)
|
Other
|
|
$2.8
|
$4.8
|
(42 %)
|
$16.4
|
$20.8
|
(21 %)
|
|
|
|
|
|
|
|
|
Net
revenue
|
|
$87.5
|
$101.8
|
(14 %)
|
$402.9
|
$510.3
|
(21 %)
|
_________________
|
13 In Q4
FY2023, 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.
|
14 For Q4
FY2023, amount is net of excise taxes of $9.3 million and other
revenue adjustments of $0.6 million (Q4 FY2022 - $13.2 million and
$3.3 million, respectively). For FY2023, amount is net of excise
taxes of $43.1 million and other revenue adjustments of $3.5
million (FY2022 - $56.7 million and $7.3 million,
respectively).
|
15 15 For Q4
FY2023, amount is net of excise taxes of $1.3 million (Q4 FY2022 -
$1.2 million). For FY2023, amount is net of excise taxes of $4.9
million (FY2022 - $5.2 million).
|
16 For Q4
FY2023, amount reflects other revenue adjustments of $3.7 million
(Q4 FY2022 - $1.8 million). For FY2023, amount reflects other
revenue adjustments of $8.6 million (FY2022 - $4.3
million)
|
17 For Q4
FY2023, amount reflects other revenue adjustments of $6.6 million
(Q4 FY2022 - $3.9 million). For FY2023, amount reflects other
revenue adjustments of $14.2 million (FY2022 - $9.9
million)
|
Canada Cannabis
- Adult-use business-to-business net revenue in Q4 FY2023
decreased 16% as compared to Q4 FY2022 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 favorable product mix.
- Adult-use business-to-consumer net revenue in Q4 FY2023
decreased 100% as compared to Q4 FY2022 due to the disposition of
all retail locations during Q3 FY2023.
- Medical net revenue in Q4 FY2023 increased 8% as compared to Q4
FY2022 driven by growth in insured patient registrations and
continued expansion of product offerings.
Rest-of-world Cannabis
- Rest-of-world cannabis revenue in Q4 FY2023 decreased 37% over
Q4 FY2022 due primarily to the divestiture of C3, the
impact of shipments to Israel in
Q4 FY2022, and a decline in our U.S. CBD business, partially offset
by growth in the Australian market.
- Excluding the impact of the divestiture of C3,
rest-of-world cannabis net revenue decreased 19% as compared to Q4
FY2022.
Storz & Bickel
- Storz & Bickel vaporizer revenue in Q4 FY2023 decreased 28%
over Q4 FY2022 due primarily to the continued trend of reductions
in consumer spending as seen in the prior quarters of FY2023 and
again in Q4 FY2023.
This Works
- This Works sales in Q4 FY2023 decreased 10% over Q4 FY2022 due
in part to softer performance of certain product lines and the
impact of foreign exchange rates.
The Q4 FY2023, Q4 FY2022, FY2023 and FY2022 financial results
presented in this press release have been prepared in accordance
with U.S. GAAP.
Webcast and Conference Call Information
The Company will host a conference call and audio webcast with
David Klein, CEO and Judy Hong, CFO at 5:30 PM
Eastern Time on June 22, 2023.
Webcast Information
A live audio webcast will be available at
https://app.webinar.net/0aNQ3wXleEd.
Replay Information
A replay will be accessible by webcast until 11:59 PM Eastern Time on September 20, 2023 at
https://app.webinar.net/0aNQ3wXleEd.
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; expected credit losses on financial assets and
related charges; 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 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 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 and explained
in the Company's Annual Report on Form 10-K 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;
- our ability to refinance debt as and when required on terms
favorable to us and comply with covenants contained in our debt
facilities and debt instruments;
- the Company's ability to execute on its strategy to accelerate
the Company's entry into the U.S. cannabis market through the
creation of CUSA;
- expectations regarding the potential success of, and the costs
and benefits associated with the Reorganization Amendments;
- expectations related to our announcement of certain
restructuring actions and the potential success of, and the costs
and benefits associated with the comprehensive steps and actions
being undertaken by the Company with respect to its Canadian
operations including any progress, challenges and effects related
thereto as well as changes in strategy, metrics, investments,
operating expenses, employee turnover and other changes with
respect thereto;
- 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 and CUSA on October
24, 2022, as amended (the "Floating Share Arrangement
Agreement"), the anticipated benefits of such arrangement, the
anticipated timing of the acquisition of Acreage's Class E
subordinate voting shares (the "Fixed Shares") and Acreage's Class
D subordinated voting shares by CUSA, 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 on April 18, 2019, as
amended, 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 negotiation and potential exchange to purchase the note
held by CBI in exchange for shares prior to its maturity;
- the anticipated timing and occurrence of the Company's special
meeting of shareholders to approve an amendment to the Company's
articles of incorporation to, among other things, create and
authorize the issuance of the Exchangeable Shares (the "Amendment
Proposal");
- 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;
- 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;
- our remediation plan and our ability to remediate the
material weaknesses in our internal control over financial
reporting;
- our ability to continue as a going concern;
- the anticipated benefits and impact of the investments in us
(the "CBI Group Investments") from Constellation Brands, Inc.
("CBI") and its affiliates (collectively, 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
adult-use 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 adult-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;
and (xiii) 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 Adjusted EBITDA and 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 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, risks related to
our ability to remediate the material weaknesses identified in our
internal control over financial reporting as of March 31, 2023, or inability to otherwise
maintain an effective system of internal control; the risk that the
restatement of the Company's: (i) audited consolidated financial
statements for the fiscal year ended March
31, 2022, originally included in our Annual Report on Form
10-K for the fiscal year ended March 31,
2022, and (ii) unaudited consolidated financial statements
for the quarterly periods ended June 30,
2022, September 30, 2022 and
December 31, 2022, originally
included in the our Quarterly Reports on Form 10-Q for such
quarterly periods could negatively affect investor confidence and
raise reputation risks; our ability to continue as a going concern;
our limited operating history; risks that we may be required to
write down intangible assets, including goodwill, due to
impairment; 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 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); volatility
in and/or degradation of general economic, market, industry or
business conditions; risks relating to our current and future
operations in emerging markets; 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 risks and uncertainty regarding future product
development; changes in regulatory requirements in relation to our
business and products; our reliance on licenses issued by and
contractual arrangements with various federal, state and provincial
governmental authorities; inherent uncertainty associated with
projections; future levels of revenues and the impact of increasing
levels of competition; third-party manufacturing risks; third-party
transportation risks; inflation risks; our exposure to risks
related to an agricultural business, including wholesale price
volatility and variable product quality; changes in laws,
regulations and guidelines and our compliance with such laws,
regulations and guidelines; risks relating to inventory write
downs; risks relating to our ability to refinance debt as and when
required on terms favorable to us and to comply with covenants
contained in our debt facilities and debt instruments; risks
associated with jointly owned investments; our ability to manage
disruptions in credit markets or changes to our credit ratings; 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;
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,
litigation or other investigations, or threatened litigation or
proceedings or investigations, on our business, financial
condition, results of operations and cash flows; risks associated
with divestment and restructuring; 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; consumer demand for
cannabis and U.S. hemp products; 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; the implementation and effectiveness of key
personnel changes; risks related to stock exchange restrictions;
risks related to the protection and enforcement of our intellectual
property rights; 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; future levels of capital,
environmental or maintenance expenditures, general and
administrative and other expenses; risks relating to the long term
macroeconomics effects of the COVID-19 pandemic and any future
pandemic or epidemic; 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, 2023. 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
description of each of these persons' interests in the Amendment
Proposal is contained in the Company's revised preliminary proxy
statement on Schedule 14A filed with the SEC on May 22, 2023 (as may be amended, the "Preliminary
Proxy Statement") and will be contained in the Company's definitive
proxy statement relating to the Amendment Proposal (the "Definitive
Proxy Statement") when it becomes available. The Preliminary Proxy
Statement is (and the Definitive Proxy Statement when it becomes
available will be) 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. Investors should read the Preliminary
Proxy Statement (and the Definitive Proxy Statement when it becomes
available) because they will contain important information.
Schedule 1
CANOPY GROWTH
CORPORATION
CONSOLIDATED BALANCE SHEETS (in thousands of Canadian
dollars, except number of shares and per share data,
unaudited)
|
|
|
|
March 31,
2023
|
|
|
March 31,
2022
|
|
|
|
|
|
|
(As
Restated)
|
|
ASSETS
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
677,007
|
|
|
$
|
776,005
|
|
Short-term
investments
|
|
|
105,595
|
|
|
|
595,651
|
|
Restricted short-term
investments
|
|
|
11,765
|
|
|
|
12,216
|
|
Amounts receivable,
net
|
|
|
93,987
|
|
|
|
86,581
|
|
Inventory
|
|
|
148,901
|
|
|
|
204,539
|
|
Prepaid expenses and
other assets
|
|
|
39,999
|
|
|
|
52,620
|
|
Total current
assets
|
|
|
1,077,254
|
|
|
|
1,727,612
|
|
Other financial
assets
|
|
|
568,292
|
|
|
|
800,328
|
|
Property, plant and
equipment
|
|
|
499,466
|
|
|
|
942,780
|
|
Intangible
assets
|
|
|
188,719
|
|
|
|
252,695
|
|
Goodwill
|
|
|
85,563
|
|
|
|
1,866,503
|
|
Other assets
|
|
|
19,804
|
|
|
|
15,342
|
|
Total
assets
|
|
$
|
2,439,098
|
|
|
$
|
5,605,260
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
76,234
|
|
|
$
|
64,270
|
|
Other accrued expenses
and liabilities
|
|
|
75,991
|
|
|
|
75,278
|
|
Current portion of
long-term debt
|
|
|
556,890
|
|
|
|
9,296
|
|
Other
liabilities
|
|
|
94,727
|
|
|
|
64,346
|
|
Total current
liabilities
|
|
|
803,842
|
|
|
|
213,190
|
|
Long-term
debt
|
|
|
749,991
|
|
|
|
1,491,695
|
|
Deferred income tax
liabilities
|
|
|
357
|
|
|
|
15,991
|
|
Liability arising from
Acreage Arrangement
|
|
|
-
|
|
|
|
47,000
|
|
Warrant derivative
liability
|
|
|
-
|
|
|
|
26,920
|
|
Other
liabilities
|
|
|
124,886
|
|
|
|
190,049
|
|
Total
liabilities
|
|
|
1,679,076
|
|
|
|
1,984,845
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
|
-
|
|
|
|
32,500
|
|
Canopy Growth
Corporation shareholders' equity:
|
|
|
|
|
|
|
Common shares - $nil
par value; Authorized - unlimited number of shares;
Issued - 517,305,551 shares and 394,422,604 shares,
respectively
|
|
|
7,938,571
|
|
|
|
7,482,809
|
|
Additional paid-in
capital
|
|
|
2,506,485
|
|
|
|
2,521,246
|
|
Accumulated other
comprehensive loss
|
|
|
(13,860)
|
|
|
|
(42,282)
|
|
Deficit
|
|
|
(9,672,761)
|
|
|
|
(6,378,199)
|
|
Total Canopy Growth
Corporation shareholders' equity
|
|
|
758,435
|
|
|
|
3,583,574
|
|
Noncontrolling
interests
|
|
|
1,587
|
|
|
|
4,341
|
|
Total shareholders'
equity
|
|
|
760,022
|
|
|
|
3,587,915
|
|
Total liabilities and
shareholders' equity
|
|
$
|
2,439,098
|
|
|
$
|
5,605,260
|
|
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,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
(As
Restated)
|
|
|
|
|
|
(As
Restated)
|
|
Revenue
|
|
$
|
98,153
|
|
|
$
|
116,119
|
|
|
$
|
450,901
|
|
|
$
|
572,214
|
|
Excise taxes
|
|
|
10,618
|
|
|
|
14,353
|
|
|
|
47,997
|
|
|
|
61,893
|
|
Net revenue
|
|
|
87,535
|
|
|
|
101,766
|
|
|
|
402,904
|
|
|
|
510,321
|
|
Cost of goods
sold
|
|
|
178,039
|
|
|
|
271,090
|
|
|
|
507,044
|
|
|
|
713,457
|
|
Gross
margin
|
|
|
(90,504)
|
|
|
|
(169,324)
|
|
|
|
(104,140)
|
|
|
|
(203,136)
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
|
104,334
|
|
|
|
117,591
|
|
|
|
456,225
|
|
|
|
472,756
|
|
Share-based
compensation
|
|
|
4,740
|
|
|
|
11,669
|
|
|
|
31,188
|
|
|
|
47,525
|
|
Asset impairment and
restructuring costs
|
|
|
405,129
|
|
|
|
241,141
|
|
|
|
2,256,742
|
|
|
|
369,339
|
|
Total operating
expenses
|
|
|
514,203
|
|
|
|
370,401
|
|
|
|
2,744,155
|
|
|
|
889,620
|
|
Operating
loss
|
|
|
(604,707)
|
|
|
|
(539,725)
|
|
|
|
(2,848,295)
|
|
|
|
(1,092,756)
|
|
Loss from equity
method investments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(100)
|
|
Other income
(expense), net
|
|
|
(59,263)
|
|
|
|
(57,428)
|
|
|
|
(466,025)
|
|
|
|
753,341
|
|
Loss before income
taxes
|
|
|
(663,970)
|
|
|
|
(597,153)
|
|
|
|
(3,314,320)
|
|
|
|
(339,515)
|
|
Income tax
recovery
|
|
|
16,361
|
|
|
|
8,458
|
|
|
|
4,774
|
|
|
|
8,948
|
|
Net loss
|
|
|
(647,609)
|
|
|
|
(588,695)
|
|
|
|
(3,309,546)
|
|
|
|
(330,567)
|
|
Net loss attributable
to noncontrolling interests and
redeemable noncontrolling interest
|
|
|
(7,529)
|
|
|
|
(6,217)
|
|
|
|
(31,388)
|
|
|
|
(20,524)
|
|
Net loss attributable
to Canopy Growth Corporation
|
|
$
|
(640,080)
|
|
|
$
|
(582,478)
|
|
|
$
|
(3,278,158)
|
|
|
$
|
(310,043)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss
per share
|
|
$
|
(1.28)
|
|
|
$
|
(1.48)
|
|
|
$
|
(7.07)
|
|
|
$
|
(0.79)
|
|
Basic and diluted
weighted average common shares
outstanding
|
|
|
498,778,062
|
|
|
|
394,248,404
|
|
|
|
463,724,414
|
|
|
|
391,324,285
|
|
Schedule 3
CANOPY GROWTH
CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of
Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
|
|
|
Years ended
March 31,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
(As
Restated)
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,309,546)
|
|
|
$
|
(330,567)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
|
56,736
|
|
|
|
76,247
|
|
Amortization of
intangible assets
|
|
|
27,781
|
|
|
|
38,171
|
|
Share of loss on
equity method investments
|
|
|
-
|
|
|
|
100
|
|
Share-based
compensation
|
|
|
31,188
|
|
|
|
47,525
|
|
Asset impairment and
restructuring costs
|
|
|
2,227,989
|
|
|
|
332,949
|
|
Income tax
recovery
|
|
|
(4,774)
|
|
|
|
(8,948)
|
|
Non-cash fair value
adjustments and charges related to
settlement of unsecured senior notes
|
|
|
353,827
|
|
|
|
(866,739)
|
|
Change in operating
assets and liabilities, net of effects from
purchases of businesses:
|
|
|
|
|
|
|
Amounts
receivable
|
|
|
(9,906)
|
|
|
|
13,603
|
|
Inventory
|
|
|
55,638
|
|
|
|
173,037
|
|
Prepaid expenses and
other assets
|
|
|
2,484
|
|
|
|
24,552
|
|
Accounts payable and
accrued liabilities
|
|
|
17,629
|
|
|
|
(35,844)
|
|
Other, including
non-cash foreign currency
|
|
|
(6,592)
|
|
|
|
(9,897)
|
|
Net cash used in
operating activities
|
|
|
(557,546)
|
|
|
|
(545,811)
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Purchases of and
deposits on property, plant and equipment
|
|
|
(9,217)
|
|
|
|
(36,684)
|
|
Purchases of
intangible assets
|
|
|
(1,337)
|
|
|
|
(11,429)
|
|
Proceeds on sale of
property, plant and equipment
|
|
|
13,609
|
|
|
|
27,279
|
|
Redemption of
short-term investments
|
|
|
502,589
|
|
|
|
545,991
|
|
Net cash proceeds on
sale of subsidiaries
|
|
|
14,932
|
|
|
|
118,149
|
|
Net cash outflow on
acquisition of subsidiaries
|
|
|
(24,223)
|
|
|
|
(14,947)
|
|
Investment in other
financial assets
|
|
|
(67,150)
|
|
|
|
(379,414)
|
|
Other investing
activities
|
|
|
4,176
|
|
|
|
(18,126)
|
|
Net cash provided by
investing activities
|
|
|
433,379
|
|
|
|
230,819
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Proceeds from issuance
of common shares and warrants
|
|
|
1,049
|
|
|
|
2,700
|
|
Proceeds from exercise
of stock options
|
|
|
281
|
|
|
|
5,567
|
|
Issuance of long-term
debt and convertible debentures
|
|
|
135,160
|
|
|
|
-
|
|
Repayment of long-term
debt
|
|
|
(118,179)
|
|
|
|
(50,763)
|
|
Other financing
activities
|
|
|
(38,005)
|
|
|
|
(3,037)
|
|
Net cash used in
financing activities
|
|
|
(19,694)
|
|
|
|
(45,533)
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
|
44,863
|
|
|
|
(18,123)
|
|
Net decrease in cash
and cash equivalents
|
|
|
(98,998)
|
|
|
|
(378,648)
|
|
Cash and cash
equivalents, beginning of period
|
|
|
776,005
|
|
|
|
1,154,653
|
|
Cash and cash
equivalents, end of period
|
|
$
|
677,007
|
|
|
$
|
776,005
|
|
|
|
|
|
|
|
|
Schedule 4
Adjusted Gross
Margin1 Reconciliation (Non-GAAP Measure)
|
|
|
|
Three months ended
March 31,
|
|
(in thousands of
Canadian dollars except where indicated; unaudited)
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
(As
Restated)
|
|
Net revenue
|
|
$
|
87,535
|
|
|
$
|
101,766
|
|
|
|
|
|
|
|
|
Gross margin, as
reported
|
|
|
(90,504)
|
|
|
|
(169,324)
|
|
Adjustments to gross
margin:
|
|
|
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
74,875
|
|
|
|
119,115
|
|
Charges related to the
flow-through of inventory
step-up on business combinations
|
|
|
-
|
|
|
|
4,163
|
|
Adjusted gross
margin1
|
|
$
|
(15,629)
|
|
|
$
|
(46,046)
|
|
|
|
|
|
|
|
|
Adjusted gross margin
percentage1
|
|
|
(18)
|
%
|
|
|
(45)
|
%
|
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)
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
(As
Restated)
|
|
Net revenue
|
|
$
|
402,904
|
|
|
$
|
510,321
|
|
|
|
|
|
|
|
|
Gross margin, as
reported
|
|
|
(104,140)
|
|
|
|
(203,136)
|
|
Adjustments to gross
margin:
|
|
|
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
90,485
|
|
|
|
123,669
|
|
Charges related to the
flow-through of inventory
step-up on business combinations
|
|
|
-
|
|
|
|
11,847
|
|
Adjusted gross
margin1
|
|
$
|
(13,655)
|
|
|
$
|
(67,620)
|
|
|
|
|
|
|
|
|
Adjusted gross margin
percentage1
|
|
|
(3)
|
%
|
|
|
(13)
|
%
|
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)
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
(As
Restated)
|
|
Net loss
|
|
$
|
(647,609)
|
|
|
$
|
(588,695)
|
|
Income tax
recovery
|
|
|
(16,361)
|
|
|
|
(8,458)
|
|
Other (income) expense,
net
|
|
|
59,263
|
|
|
|
57,428
|
|
Share-based
compensation
|
|
|
4,740
|
|
|
|
11,669
|
|
Acquisition-related
costs
|
|
|
3,548
|
|
|
|
1,272
|
|
Depreciation and
amortization2
|
|
|
20,771
|
|
|
|
30,489
|
|
Asset impairment and
restructuring costs
|
|
|
405,129
|
|
|
|
241,141
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
74,875
|
|
|
|
119,115
|
|
Charges related to the
flow-through of inventory
step-up on business combinations
|
|
|
-
|
|
|
|
4,163
|
|
Adjusted
EBITDA1
|
|
$
|
(95,644)
|
|
|
$
|
(131,876)
|
|
1Adjusted
EBITDA is a non-GAAP measure. See "Non-GAAP Measures".
|
|
2 From
Consolidated Statements of Cash Flows.
|
|
|
|
|
|
|
|
|
Years ended March
31,
|
|
(in thousands of
Canadian dollars, unaudited)
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
(As
Restated)
|
|
Net loss
|
|
$
|
(3,309,546)
|
|
|
$
|
(330,567)
|
|
Income tax
recovery
|
|
|
(4,774)
|
|
|
|
(8,948)
|
|
Other (income) expense,
net
|
|
|
466,025
|
|
|
|
(753,341)
|
|
Loss on equity method
investments
|
|
|
-
|
|
|
|
100
|
|
Share-based
compensation
|
|
|
31,188
|
|
|
|
47,525
|
|
Acquisition-related
costs
|
|
|
35,694
|
|
|
|
11,060
|
|
Depreciation and
amortization2
|
|
|
84,517
|
|
|
|
114,418
|
|
Asset impairment and
restructuring costs
|
|
|
2,256,742
|
|
|
|
358,708
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
90,485
|
|
|
|
123,669
|
|
Charges related to the
flow-through of inventory
step-up on business combinations
|
|
|
-
|
|
|
|
11,847
|
|
Adjusted
EBITDA1
|
|
$
|
(349,669)
|
|
|
$
|
(425,529)
|
|
1Adjusted
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 March
31,
|
|
(in thousands of
Canadian dollars, unaudited)
|
|
2023
|
|
|
2022
|
|
Net cash used in
operating activities
|
|
$
|
(139,737)
|
|
|
$
|
(126,686)
|
|
Purchases of and
deposits on property, plant and equipment
|
|
|
(3,041)
|
|
|
|
(64)
|
|
Free cash
flow1
|
|
$
|
(142,778)
|
|
|
$
|
(126,750)
|
|
1Free cash
flow is a non-GAAP measure. See "Non-GAAP Measures".
|
|
|
|
Years ended March
31,
|
|
(in thousands of
Canadian dollars, unaudited)
|
|
2023
|
|
|
2022
|
|
Net cash used in
operating activities
|
|
$
|
(557,546)
|
|
|
$
|
(545,811)
|
|
Purchases of and
deposits on property, plant and equipment
|
|
|
(9,217)
|
|
|
|
(36,684)
|
|
Free cash
flow1
|
|
$
|
(566,763)
|
|
|
$
|
(582,495)
|
|
1Free 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
March 31,
|
|
(in thousands of
Canadian dollars except where indicated; unaudited)
|
2023
|
|
|
2022
|
|
|
|
|
|
|
(As
Restated)
|
|
Canada cannabis
segment
|
|
|
|
|
|
|
Net revenue
|
|
$
|
35,731
|
|
|
$
|
52,031
|
|
Gross margin, as
reported
|
|
|
(69,825)
|
|
|
|
(114,895)
|
|
Gross margin
percentage, as reported
|
|
|
(195)
|
%
|
|
|
(221)
|
%
|
Adjustments to gross
margin:
|
|
|
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
69,589
|
|
|
|
65,520
|
|
Charges related to the
flow-through of inventory
step-up on business combinations
|
|
|
-
|
|
|
|
4,163
|
|
Adjusted gross
margin1
|
|
$
|
(236)
|
|
|
$
|
(45,212)
|
|
Adjusted gross margin
percentage1
|
|
|
(1)
|
%
|
|
|
(87)
|
%
|
|
|
|
|
|
|
|
Rest-of-world
cannabis segment
|
|
|
|
|
|
|
Revenue
|
|
$
|
8,770
|
|
|
$
|
13,944
|
|
Gross margin, as
reported
|
|
|
354
|
|
|
|
(53,120)
|
|
Gross margin
percentage, as reported
|
|
|
4
|
%
|
|
|
(381)
|
%
|
Adjustments to gross
margin:
|
|
|
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
938
|
|
|
|
53,595
|
|
Adjusted gross
margin1
|
|
$
|
1,292
|
|
|
$
|
475
|
|
Adjusted gross margin
percentage1
|
|
|
15
|
%
|
|
|
3
|
%
|
|
|
|
|
|
|
|
Storz & Bickel
segment
|
|
|
|
|
|
|
Revenue
|
|
$
|
15,494
|
|
|
$
|
21,624
|
|
Gross margin, as
reported
|
|
|
5,303
|
|
|
|
9,661
|
|
Gross margin
percentage, as reported
|
|
|
34
|
%
|
|
|
45
|
%
|
|
|
|
|
|
|
|
Adjusted gross
margin1
|
|
$
|
5,303
|
|
|
$
|
9,661
|
|
Adjusted gross margin
percentage1
|
|
|
34
|
%
|
|
|
45
|
%
|
|
|
|
|
|
|
|
BioSteel
segment
|
|
|
|
|
|
|
Revenue
|
|
$
|
19,298
|
|
|
$
|
3,475
|
|
Gross margin, as
reported
|
|
|
(26,185)
|
|
|
|
(13,361)
|
|
Gross margin
percentage, as reported
|
|
|
(136)
|
%
|
|
|
(384)
|
%
|
Adjustments to gross
margin:
|
|
|
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
3,202
|
|
|
|
-
|
|
Adjusted gross
margin1
|
|
$
|
(22,983)
|
|
|
$
|
(13,361)
|
|
Adjusted gross margin
percentage1
|
|
|
(119)
|
%
|
|
|
(384)
|
%
|
|
|
|
|
|
|
|
This Works
segment
|
|
|
|
|
|
|
Revenue
|
|
$
|
5,352
|
|
|
$
|
5,988
|
|
Gross margin, as
reported
|
|
|
1,223
|
|
|
|
2,377
|
|
Gross margin
percentage, as reported
|
|
|
23
|
%
|
|
|
40
|
%
|
Adjustments to gross
margin:
|
|
|
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
1,146
|
|
|
|
-
|
|
Adjusted gross
margin1
|
|
$
|
2,369
|
|
|
$
|
2,377
|
|
Adjusted gross margin
percentage1
|
|
|
44
|
%
|
|
|
40
|
%
|
|
|
|
|
|
|
|
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.
|
|
|
Years ended March
31,
|
|
(in thousands of
Canadian dollars except where indicated; unaudited)
|
2023
|
|
|
2022
|
|
|
|
|
|
|
(As
Restated)
|
|
Canada cannabis
segment
|
|
|
|
|
|
|
Net revenue
|
|
$
|
187,067
|
|
|
$
|
257,910
|
|
Gross margin, as
reported
|
|
|
(95,291)
|
|
|
|
(212,820)
|
|
Gross margin
percentage, as reported
|
|
|
(51)
|
%
|
|
|
(83)
|
%
|
Adjustments to gross
margin:
|
|
|
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
71,278
|
|
|
|
67,492
|
|
Charges related to the
flow-through of inventory
step-up on business combinations
|
|
|
-
|
|
|
|
11,847
|
|
Adjusted gross
margin1
|
|
$
|
(24,013)
|
|
|
$
|
(133,481)
|
|
Adjusted gross margin
percentage1
|
|
|
(13)
|
%
|
|
|
(52)
|
%
|
|
|
|
|
|
|
|
Rest-of-world
cannabis segment
|
|
|
|
|
|
|
Revenue
|
|
$
|
38,949
|
|
|
$
|
79,306
|
|
Gross margin, as
reported
|
|
|
(3,322)
|
|
|
|
(28,875)
|
|
Gross margin
percentage, as reported
|
|
|
(9)
|
%
|
|
|
(36)
|
%
|
Adjustments to gross
margin:
|
|
|
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
8,224
|
|
|
|
56,177
|
|
Adjusted gross
margin1
|
|
|
4,902
|
|
|
|
27,302
|
|
Adjusted gross margin
percentage1
|
|
|
13
|
%
|
|
|
34
|
%
|
|
|
|
|
|
|
|
Storz & Bickel
segment
|
|
|
|
|
|
|
Revenue
|
|
$
|
64,845
|
|
|
$
|
85,410
|
|
Gross margin, as
reported
|
|
|
26,112
|
|
|
|
37,284
|
|
Gross margin
percentage, as reported
|
|
|
40
|
%
|
|
|
44
|
%
|
|
|
|
|
|
|
|
Adjusted gross
margin1
|
|
|
26,112
|
|
|
|
37,284
|
|
Adjusted gross margin
percentage1
|
|
|
40
|
%
|
|
|
44
|
%
|
|
|
|
|
|
|
|
BioSteel
segment
|
|
|
|
|
|
|
Revenue
|
|
$
|
69,649
|
|
|
$
|
34,622
|
|
Gross margin, as
reported
|
|
|
(40,613)
|
|
|
|
(15,722)
|
|
Gross margin
percentage, as reported
|
|
|
(58)
|
%
|
|
|
(45)
|
%
|
Adjustments to gross
margin:
|
|
|
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
8,683
|
|
|
|
-
|
|
Adjusted gross
margin1
|
|
|
(31,930)
|
|
|
|
(15,722)
|
|
Adjusted gross margin
percentage1
|
|
|
(46)
|
%
|
|
|
(45)
|
%
|
|
|
|
|
|
|
|
This Works
segment
|
|
|
|
|
|
|
Revenue
|
|
$
|
26,029
|
|
|
$
|
32,296
|
|
Gross margin, as
reported
|
|
|
10,205
|
|
|
|
14,800
|
|
Gross margin
percentage, as reported
|
|
|
39
|
%
|
|
|
46
|
%
|
Adjustments to gross
margin:
|
|
|
|
|
|
|
Restructuring costs
recorded in cost of goods sold
|
|
|
2,300
|
|
|
|
-
|
|
Adjusted gross
margin1
|
|
$
|
12,505
|
|
|
$
|
14,800
|
|
Adjusted gross margin
percentage1
|
|
|
48
|
%
|
|
|
46
|
%
|
1 Adjusted gross margin and
adjusted gross margin percentage are non-GAAP measures. See
"Non-GAAP Measures"
Schedule 8
Summary of BioSteel
Revenue and Adjusted EBITDA Restatement Impacts
|
|
|
|
|
|
|
(in thousands of
Canadian dollars except where indicated; unaudited)
|
|
BioSteel
|
Net
Revenue
|
FY22
|
Q1
FY23
|
Q2
FY23
|
Q3
FY23
|
YTD Q3
FY23
|
As Previously
Reported
|
44,626
|
17,888
|
29,922
|
16,363
|
64,173
|
Restatement
Adjustments
|
(10,004)
|
(4,195)
|
(12,445)
|
2,818
|
(13,822)
|
As
Restated
|
34,622
|
13,693
|
17,477
|
19,181
|
50,351
|
-
|
|
|
|
|
|
-
|
Canopy Growth
Consolidated
|
Net
Revenue
|
FY22
|
Q1
FY23
|
Q2
FY23
|
Q3
FY23
|
YTD Q3
FY23
|
As Previously
Reported
|
520,325
|
110,115
|
117,863
|
101,213
|
329,191
|
Restatement
Adjustments
|
(10,004)
|
(4,195)
|
(12,445)
|
2,818
|
(13,822)
|
As
Restated
|
510,321
|
105,920
|
105,418
|
104,031
|
315,369
|
-
|
|
|
|
|
|
-
|
Canopy Growth
Consolidated
|
Adjusted
EBITDA
|
FY22
|
Q1
FY23
|
Q2
FY23
|
Q3
FY23
|
YTD Q3
FY23
|
As Previously
Reported
|
(415,447)
|
(74,800)
|
(78,099)
|
(87,502)
|
(240,401)
|
Restatement
Adjustments
|
(10,082)
|
(4,194)
|
(11,776)
|
2,346
|
(13,624)
|
As
Restated
|
(425,529)
|
(78,994)
|
(89,875)
|
(85,156)
|
(254,025)
|
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SOURCE Canopy Growth Corporation