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SMITHS FALLS, ON, Nov. 9, 2022 /PRNewswire/ - Canopy Growth Corporation ("Canopy Growth" or the "Company") (TSX: WEED) (NASDAQ: CGC) today announces its financial results for the second quarter ended September 30, 2022. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.
Highlights
"Our second quarter marks a key inflection-point for Canopy, demonstrating momentum across our key businesses and accelerating our entry into the U.S. cannabis market through the creation of Canopy USA. Canopy is ideally positioned to capitalize on this once-in-a-generation opportunity and accelerate our path to North American cannabis market leadership."
David Klein, Chief Executive Officer
"We delivered solid sequential quarterly net revenue growth and improved margins, led by another record quarter for BioSteel, the stabilization of our Canadian cannabis business, and continued actions to reduce overall costs. We are pressing forward on our path to profitability in Canada and expect Canopy USA will meaningfully enhance our growth and profitability over time once it closes the announced acquisitions of Acreage, Jetty, and Wana."
Judy Hong, Chief Financial Officer
Second Quarter Fiscal 2023 Financial Summary
(in millions of Canadian | Net Revenue | Gross margin | Adjusted | Net loss | Adjusted | Free cash | |
Reported | $117.9 | 3 % | 10 % | $(231.9) | $(78.1) | $(135.4) | |
vs. Q2 FY2022 | (10 %) | 5,700 bps | 6,200 bps | (1,320 %) | 52 % | (34 %) |
Revenues:
Net revenue of $118 million in Q2 FY2023 declined 10% versus Q2 FY2022. The decrease is primarily attributable to increased competition in the Canadian adult-use cannabis market, the divestiture of C³ Cannabinoid Compound Company GmbH ("C3"), and softer performance from This Works, offset by revenue growth at BioSteel. Excluding the impact from the divestiture of C3, net revenue declined 1% versus Q2 FY2022. When adjusting for both the impact of C3 and the ongoing divestiture of our Canadian retail business, revenues for the period increased 2% versus Q2 FY2022. Net revenue increased 7% in Q2 FY2023 relative to Q1 FY2023, despite the continued impacts of macroeconomic headwinds and evolving Canadian cannabis market dynamics.
Gross margin1:
Reported gross margin in Q2 FY2023 was 3% as compared to (54%) in Q2 FY2022. Excluding non-cash restructuring costs recorded in cost of goods sold of $8 million, adjusted gross margin was 10%. Gross margin in Q2 FY2023 was impacted by lower production output and price compression in the Canadian adult-use cannabis business, the divesture of C3, and a decrease in the amount of payroll subsidies received from the Canadian government pursuant to a COVID-19 relief program.
Operating expenses:
Total SG&A expenses in Q2 FY2023 were flat versus Q2 FY2022, driven by year-over-year reductions in General & Administrative ("G&A") and Research & Development ("R&D") expenses, offset by increases in Acquisition-Related Costs and Sales and Marketing expenses. The increase in Sales and Marketing expenses was primarily driven by the investment in the BioSteel NHL partnership announced in July 2022.
Net Loss:
Net Loss in Q2 FY2023 was $232 million, which is a $216 million increase in the net loss versus Q2 FY2022, driven primarily by non- cash fair value changes and an increase in asset impairment and restructuring costs, partially offset by improved margins.
Adjusted EBITDA2:
Adjusted EBITDA loss in Q2 FY2023 was $78 million, an $85 million improvement in Adjusted EBITDA loss versus Q2 FY2022 due to the improvement in gross margin and reductions in G&A and R&D expenses.
Free Cash Flow3:
Free Cash Flow in Q2 FY2023 was an outflow of $135 million, a 34% increase in outflow versus Q2 FY2022. Relative to Q2 FY2022, the outflow increase is due to the timing of certain payments in each period. Year-to-date Free Cash Flow in FY2023 is in line with the prior year period.
Cash Position:
Cash and short-term investments amounted to $1,143 million at September 30, 2022, representing a decrease of $229 million from $1,372 million at March 31, 2022 reflecting primarily Adjusted EBITDA losses and interest costs.
1 Adjusted gross margin is a non-GAAP measure, and for Q2 FY2023 excludes $8.0 million of restructuring costs recorded in cost of goods sold (Q2 FY2022 - excludes $3.1 million related to the flow-through of inventory step-up associated with the acquisition of Supreme Cannabis and $nil of restructuring costs recorded in cost of goods sold). See "Non-GAAP Measures". |
Business Highlights
Canadian cannabis business proved resilient with stabilized revenue in adult-use cannabis, benefiting from mainstream and premium flower innovation and growth in medical cannabis
Gains in distribution and sales velocity of BioSteel RTD drove record revenue in Q2 FY2023
4 Unless otherwise indicated, market share data disclosed in this press release is calculated using the Company's internal proprietary market share tool that utilizes point of sales data supplied by third-party data providers, government agencies and our own retail store operations across the country. |
5 IRI data for the 13 weeks ended October 2, 2022. |
Canopy USA is expected to fast track entry into the U.S. cannabis market and create a truly North American cannabis brand powerhouse while accelerating Canopy Growth's path to profitability
6 Until such time as the rights to acquire Acreage is exercised, Canopy USA will have no direct or indirect economic or voting interests in Acreage, Canopy USA will not directly or indirectly control Acreage, and Canopy USA, on the one hand, and Acreage, on the other hand, will continue to operate independently of one another. The Company holds non-voting and non-participating shares in Canopy USA that are exchangeable into common shares of Canopy USA. |
Second Quarter Fiscal 2023 Revenue Review11
Revenue by Channel
(in millions of Canadian dollars, unaudited) | Q2 FY2023 | Q2 FY2022 | Vs. Q2 FY2022 | |
Canada cannabis | ||||
Canadian recreational cannabis | ||||
Business-to-business12 | $25.3 | $41.9 | (40 %) | |
Business-to-consumer | $12.8 | $16.7 | (23 %) | |
$38.1 | $58.6 | (35 %) | ||
Canadian medical cannabis13 | $14.2 | $13.1 | 8 % | |
$52.3 | $71.7 | (27 %) | ||
Rest-of-world cannabis | ||||
C3 | $- | $11.9 | (100 %) | |
Other rest-of-world cannabis14 | $10.6 | $11.7 | (9 %) | |
$10.6 | $23.6 | (55 %) | ||
Storz & Bickel | $13.5 | $14.5 | (7 %) | |
BioSteel15 | $29.9 | $7.5 | 299 % | |
This Works | $6.9 | $9.1 | (24 %) | |
Other | $4.7 | $5.0 | (6 %) | |
Net revenue | $117.9 | $131.4 | (10 %) |
11 In Q2 FY23, we are reporting our financial results for the following five reportable segments: (i) Canada cannabis; (ii) rest-of-world cannabis; (iii) Storz & Bickel; (iv) BioSteel; and (v) This Works. Information regarding segment net revenue and segment gross margin for the comparative periods has been restated to reflect the aforementioned change in reportable segments. |
Revenue by Form
(in millions of Canadian dollars, unaudited) | Q2 FY2023 | Q2 FY2022 | Vs. Q2 FY2022 | |
Canada cannabis | ||||
Dry bud16,17 | $43.2 | $62.0 | (30 %) | |
Oils and softgels16,17 | $11.9 | $13.4 | (11 %) | |
Beverages, edibles, topicals and vapes16,17 | $10.1 | $10.6 | (5 %) | |
Other revenue adjustments17 | $(0.4) | $- | (100 %) | |
Excise taxes | $(12.5) | $(14.3) | 13 % | |
$52.3 | $71.7 | (27 %) | ||
Rest-of-world cannabis18 | ||||
Dry bud | $6.7 | $4.0 | 68 % | |
Oils and soft gels | $2.4 | $12.8 | (81 %) | |
Beverages, edibles, topicals and vapes | $1.5 | $6.8 | (78 %) | |
$10.6 | $23.6 | (55 %) | ||
Storz & Bickel | $13.5 | $14.5 | (7 %) | |
BioSteel18 | $29.9 | $7.5 | 299 % | |
This Works | $6.9 | $9.1 | (24 %) | |
Other | $4.7 | $5.0 | (6 %) | |
Net revenue | $117.9 | $131.4 | (10 %) |
Canada Cannabis
Rest-of-world Cannabis
Storz & Bickel
BioSteel
This Works
The Q2 FY2023 and Q2 FY2022 financial results presented in this press release have been prepared in accordance with U.S. GAAP.
16 Excludes the impact of other revenue adjustments. |
17 Other revenue adjustments represent the Company's determination of returns and pricing adjustments and relate to the Canadian recreational business‐to‐business channel. |
18 Includes the impact of other revenue adjustments, which represent the Company's determination of returns and other pricing adjustments. |
Webcast and Conference Call Information
The Company will host a conference call and audio webcast with David Klein, CEO and Judy Hong, CFO at 10:00 AM Eastern Time on November 9, 2022.
Webcast Information
A live audio webcast will be available at https://app.webinar.net/nwPeJ3EBZG8
Replay Information
A replay will be accessible by webcast until 11:59 PM Eastern Time on February 7, 2023 at https://app.webinar.net/nwPeJ3EBZG8
Non-GAAP Measures
Adjusted EBITDA is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted EBITDA is calculated as the reported net income (loss), adjusted to exclude income tax recovery (expense); other income (expense), net; loss on equity method investments; share-based compensation expense; depreciation and amortization expense; asset impairment and restructuring costs; restructuring costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition-related costs. Asset impairments related to periodic changes to the Company's supply chain processes are not excluded from Adjusted EBITDA given their occurrence through the normal course of core operational activities. The Adjusted EBITDA reconciliation is presented within this news release and explained in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022 (the "Form 10-Q") to be filed with the SEC.
Free Cash Flow is a non- GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. This measure is calculated as net cash provided by (used in) operating activities less purchases of and deposits on property, plant and equipment. The Free Cash Flow reconciliation is presented within this news release and explained in the Form 10-Q.
Adjusted Gross Margin and Adjusted Gross Margin Percentage are non-GAAP measures used by management that are not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted Gross Margin is calculated as gross margin excluding restructuring and other charges recorded in cost of goods sold, and charges related to the flow-through of inventory step-up on business combinations. Adjusted Gross Margin Percentage is calculated as Adjusted Gross Margin divided by net revenue. The Adjusted Gross Margin and Adjusted Gross Margin Percentage reconciliation is presented within this news release and explained in the Company's Quarterly Report on Form 10-Q to be filed with the SEC.
.About Canopy Growth Corporation
Canopy Growth Corporation ("Canopy") is a leading North American cannabis and CPG company dedicated to unleashing the power of cannabis to improve lives.
Through an unwavering commitment to our consumers, Canopy delivers innovative products with a focus on premium and mainstream cannabis brands including Doja, 7ACRES, Tweed, and Deep Space. Our CPG portfolio features sugar-free sports hydration brand BioSteel, targeted 24-hour skincare and wellness solutions from This Works, gourmet wellness products by Martha Stewart CBD, and category defining vaporizer technology made in Germany by Storz & Bickel.
Canopy has also established a comprehensive ecosystem to realize the opportunities presented by the U.S. THC market through its rights to Acreage Holdings, a vertically integrated multi-state cannabis operator with principal operations in densely populated states across the Northeast, as well as Wana Brands, a leading cannabis edible brand in North America, and Jetty Extracts, a California-based producer of high-quality cannabis extracts and pioneer of clean vape technology.
Beyond our world-class products, Canopy is leading the industry forward through a commitment to social equity, responsible use, and community reinvestment—pioneering a future where cannabis is understood and welcomed for its potential to help achieve greater well-being and life enhancement.
For more information visit www.canopygrowth.com.
Notice Regarding Forward Looking Statements
This press release contains "forward-looking statements" within the meaning of applicable securities laws, which involve certain known and unknown risks and uncertainties. To the extent any forward-looking statements in this news release constitutes "financial outlooks" within the meaning of applicable Canadian securities laws, the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such financial outlooks. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as "intend," "goal," "strategy," "estimate," "expect," "project," "projections," "forecasts," "plans," "seeks," "anticipates," "potential," "proposed," "will," "should," "could," "would," "may," "likely," "designed to," "foreseeable future," "believe," "scheduled" and other similar expressions. Our actual results or outcomes may differ materially from those anticipated. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
Forward-looking statements include, but are not limited to, statements with respect to:
Certain of the forward-looking statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.
The forward-looking statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including: (i) management's perceptions of historical trends, current conditions and expected future developments; (ii) our ability to generate cash flow from operations; (iii) general economic, financial market, regulatory and political conditions in which we operate; (iv) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (v) consumer interest in our products; (vi) competition; (vii) anticipated and unanticipated costs; (viii) government regulation of our activities and products including but not limited to the areas of taxation and environmental protection; (ix) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; * our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xi) our ability to conduct operations in a safe, efficient and effective manner; (xii) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; (xiii) our ability to continue to operate in light of the COVID-19 pandemic and the impact of the pandemic on demand for, and sales of, our products and our distribution channels; and (xiv) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct. Financial outlooks, as with forward-looking statements generally, are, without limitation, based on the assumptions and subject to various risks as set out herein. Our actual financial position and results of operations may differ materially from management's current expectations and, as a result, our SG&A cost savings may differ materially from the values provided in this news release.
By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release and other reports we file with, or furnish to, the Securities and Exchange Commission (the "SEC") and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, our limited operating history; the risks that the stock exchanges on which we are listed may disagree with our interpretations of their policies, including that financial consolidation of Canopy USA may be permissible in the event that Canopy USA closes on the acquisition of Wana, Jetty or the Fixed Shares of Acreage Holdings; inherent uncertainty associated with projections; the diversion of management time on issues related to Canopy USA; the ability of parties to certain transactions to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court and shareholder approvals; the risks that our Restructuring Actions will not result in the expected cost-savings, efficiencies and other benefits or will result in greater than anticipated turnover in personnel; risks that we may be required to write down intangible assets, including goodwill, due to impairment; changes in laws, regulations and guidelines and our compliance with such laws, regulations and guidelines; the risk that the COVID-19 pandemic may disrupt our operations and those of our suppliers and distribution channels and negatively impact the demand for and use of our products; consumer demand for cannabis and U.S. hemp products; inflation risks; the risks and uncertainty regarding future product development; our reliance on licenses issued by and contractual arrangements with various federal, state and provincial governmental authorities; the risk that cost savings and any other synergies from the CBI Group Investments may not be fully realized or may take longer to realize than expected; the implementation and effectiveness of key personnel changes; risks associated with jointly owned investments; risks relating to our current and future operations in emerging markets; risks relating to inventory write downs; future levels of revenues and the impact of increasing levels of competition; risks related to the protection and enforcement of our intellectual property rights; our ability to manage disruptions in credit markets or changes to our credit ratings; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; risks related to the integration of acquired businesses; the timing and manner of the legalization of cannabis in the United States; business strategies, growth opportunities and expected investment; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); counterparty risks and liquidity risks that may impact our ability to obtain loans and other credit facilities on favorable terms; the potential effects of judicial, regulatory or other proceedings, or threatened litigation or proceedings, on our business, financial condition, results of operations and cash flows; risks related to stock exchange restrictions; risks associated with divestment and restructuring; volatility in and/or degradation of general economic, market, industry or business conditions; our exposure to risks related to an agricultural business, including wholesale price volatility and variable product quality; third-party manufacturing risks; third-party transportation risks; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis and U.S. hemp products in vaping devices; the anticipated effects of actions of third parties such as competitors, activist investors or federal, state, provincial, territorial or local regulatory authorities, self-regulatory organizations, plaintiffs in litigation or persons threatening litigation; changes in regulatory requirements in relation to our business and products; and the factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended March 31, 2022 and in Item 1A of Part II of the Form 10-Q. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.
Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management's current expectations and plans relating to the future, and the reader is cautioned that the forward-looking statements may not be appropriate for any other purpose. While we believe that the assumptions and expectations reflected in the forward-looking statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-looking statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by law. The forward-looking statements contained in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements.
Participants in the Solicitation
Canopy Growth and its directors and executive officers may be deemed participants in the solicitation of proxies from Canopy Growth shareholders with respect to the Amendment Proposal. A list of the names of those directors and executive officers and a description of their interests in Canopy Growth is contained in Canopy Growth's definitive proxy statement on Schedule 14A filed with the SEC on July 29, 2022 and is available free of charge at the SEC's website at www.sec.gov, or by directing a request to Canopy Growth Corporation, 1 Hershey Drive, Smiths Falls, Ontario, K7A 0A8 or by email to invest@canopygrowth.com. Additional information regarding the interests of such participants will be contained in the Proxy Statement when it becomes available. Investors should read the Proxy Statement when it becomes available because it will contain important information.
Schedule 1
CANOPY GROWTH CORPORATION | ||||||||
September 30, | March 31, | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 746,719 | $ | 776,005 | ||||
Short-term investments | 396,702 | 595,651 | ||||||
Restricted short-term investments | 12,352 | 12,216 | ||||||
Amounts receivable, net | 108,236 | 96,443 | ||||||
Inventory | 211,209 | 204,387 | ||||||
Prepaid expenses and other assets | 62,957 | 52,700 | ||||||
Total current assets | 1,538,175 | 1,737,402 | ||||||
Other financial assets | 625,059 | 800,328 | ||||||
Property, plant and equipment | 864,523 | 942,780 | ||||||
Intangible assets | 223,501 | 252,695 | ||||||
Goodwill | 136,513 | 1,866,503 | ||||||
Other assets | 14,499 | 15,342 | ||||||
Total assets | $ | 3,402,270 | $ | 5,615,050 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 68,203 | $ | 64,270 | ||||
Other accrued expenses and liabilities | 88,577 | 75,278 | ||||||
Current portion of long-term debt | 321,976 | 9,296 | ||||||
Other liabilities | 63,645 | 64,054 | ||||||
Total current liabilities | 542,401 | 212,898 | ||||||
Long-term debt | 1,032,134 | 1,491,695 | ||||||
Deferred income tax liabilities | 9,758 | 15,991 | ||||||
Liability arising from Acreage Arrangement | - | 47,000 | ||||||
Warrant derivative liability | 691 | 26,920 | ||||||
Other liabilities | 153,257 | 190,049 | ||||||
Total liabilities | 1,738,241 | 1,984,553 | ||||||
Commitments and contingencies | ||||||||
Redeemable noncontrolling interest | 35,900 | 36,200 | ||||||
Canopy Growth Corporation shareholders' equity: | ||||||||
Common shares - $nil par value; Authorized - unlimited number of shares; | 7,818,089 | 7,482,809 | ||||||
Additional paid-in capital | 2,516,811 | 2,519,766 | ||||||
Accumulated other comprehensive loss | (33,707) | (42,282) | ||||||
Deficit | (8,676,020) | (6,370,337) | ||||||
Total Canopy Growth Corporation shareholders' equity | 1,625,173 | 3,589,956 | ||||||
Noncontrolling interests | 2,956 | 4,341 | ||||||
Total shareholders' equity | 1,628,129 | 3,594,297 | ||||||
Total liabilities and shareholders' equity | $ | 3,402,270 | $ | 5,615,050 |
Schedule 2
CANOPY GROWTH CORPORATION | ||||||||
Three months ended September 30, | ||||||||
2022 | 2021 | |||||||
Revenue | $ | 130,359 | $ | 145,648 | ||||
Excise taxes | 12,496 | 14,274 | ||||||
Net revenue | 117,863 | 131,374 | ||||||
Cost of goods sold | 114,042 | 202,514 | ||||||
Gross margin | 3,821 | (71,140) | ||||||
Operating expenses: | ||||||||
Selling, general and administrative expenses | 125,842 | 125,756 | ||||||
Share-based compensation | 9,858 | 15,953 | ||||||
Asset impairment and restructuring costs | 43,968 | 2,510 | ||||||
Total operating expenses | 179,668 | 144,219 | ||||||
Operating loss | (175,847) | (215,359) | ||||||
Other income (expense), net | (47,844) | 195,821 | ||||||
Loss before income taxes | (223,691) | (19,538) | ||||||
Income tax (expense) recovery | (8,220) | 3,207 | ||||||
Net loss | (231,911) | (16,331) | ||||||
Net loss attributable to noncontrolling interests and | (10,105) | (5,273) | ||||||
Net loss attributable to Canopy Growth Corporation | $ | (221,806) | $ | (11,058) | ||||
Basic and diluted loss per share | $ | (0.47) | $ | (0.03) | ||||
Basic and diluted weighted average common shares outstanding | 471,592,150 | 393,274,758 |
Schedule 3
CANOPY GROWTH CORPORATION | |||||||
Six months ended September 30, | |||||||
2022 | 2021 | ||||||
Cash flows from operating activities: | |||||||
Net (loss) income | $ | (2,319,467) | $ | 373,624 | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation of property, plant and equipment | 29,608 | 37,108 | |||||
Amortization of intangible assets | 13,536 | 16,804 | |||||
Share of loss on equity method investments | - | 100 | |||||
Share-based compensation | 15,297 | 29,079 | |||||
Asset impairment and restructuring costs | 1,783,784 | 80,690 | |||||
Income tax expense (recovery) | 11,969 | (307) | |||||
Non-cash fair value adjustments and charges related to | 231,704 | (834,090) | |||||
Change in operating assets and liabilities, net of effects from | |||||||
Amounts receivable | (11,793) | 12,354 | |||||
Inventory | (6,822) | (3,423) | |||||
Prepaid expenses and other assets | (17,567) | 40,208 | |||||
Accounts payable and accrued liabilities | 14,842 | 3,778 | |||||
Other, including non-cash foreign currency | (19,006) | (7,670) | |||||
Net cash used in operating activities | (273,915) | (251,745) | |||||
Cash flows from investing activities: | |||||||
Purchases of and deposits on property, plant and equipment | (4,308) | (35,658) | |||||
Purchases of intangible assets | (938) | (2,729) | |||||
Proceeds on sale of property, plant and equipment | 10,784 | 2,290 | |||||
Redemption (purchases) of short-term investments | 211,092 | (705) | |||||
Net cash proceeds on sale of subsidiaries | 12,432 | 10,324 | |||||
(Investment in) sale of other financial assets | (29,205) | 110 | |||||
Net cash outflow on acquisition of subsidiaries | - | (9,070) | |||||
Other investing activities | 7,143 | (10,859) | |||||
Net cash provided by (used in) investing activities | 207,000 | (46,297) | |||||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common shares and warrants | 856 | 1,460 | |||||
Proceeds from exercise of stock options | 270 | 4,886 | |||||
Repayment of long-term debt | (423) | (49,991) | |||||
Other financing activities | (13,116) | (3,036 | |||||
Net cash used in financing activities | (12,413) | (46,681) | |||||
Effect of exchange rate changes on cash and cash equivalents | 50,042 | (2,309) | |||||
Net decrease in cash and cash equivalents | (29,286) | (347,032) | |||||
Cash and cash equivalents, beginning of period | 776,005 | 1,154,653 | |||||
Cash and cash equivalents, end of period | $ | 746,719 | $ | 807,621 |
Schedule 4
Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure) | |||||||
Three months ended September 30, | |||||||
(in thousands of Canadian dollars except where indicated; unaudited) | 2022 | 2021 | |||||
Net revenue | $ | 117,863 | $ | 131,374 | |||
Gross margin, as reported | 3,821 | (71,140) | |||||
Adjustments to gross margin: | |||||||
Restructuring costs recorded in cost of goods sold | 8,023 | - | |||||
Charges related to the flow-through of inventory | - | 3,123 | |||||
Adjusted gross margin1 | $ | 11,844 | $ | (68,017) | |||
Adjusted gross margin percentage1 | 10 % | (52) % | |||||
1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See "Non-GAAP Measures". |
Schedule 5
Adjusted EBITDA1 Reconciliation (Non-GAAP Measure) | ||||||||
Three months ended September 30, | ||||||||
(in thousands of Canadian dollars, unaudited) | 2022 | 2021 | ||||||
Net loss | $ | (231,911) | $ | (16,331) | ||||
Income tax expense (recovery) | 8,220 | (3,207) | ||||||
Other (income) expense, net | 47,844 | (195,821) | ||||||
Share-based compensation2 | 9,858 | 15,953 | ||||||
Acquisition-related costs | 14,606 | 2,391 | ||||||
Depreciation and amortization2 | 21,293 | 28,780 | ||||||
Asset impairment and restructuring costs | 43,968 | 2,510 | ||||||
Restructuring costs recorded in cost of goods sold | 8,023 | - | ||||||
Charges related to the flow-through of inventory | - | 3,123 | ||||||
Adjusted EBITDA1 | $ | (78,099) | $ | (162,602) | ||||
1 Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures". |
Schedule 6
Free Cash Flow1 Reconciliation (Non-GAAP Measure) | ||||||||
Three months ended September 30, | ||||||||
(in thousands of Canadian dollars, unaudited) | 2022 | 2021 | ||||||
Net cash used in operating activities | $ | (133,400) | $ | (85,965) | ||||
Purchases of and deposits on property, plant and equipment | (2,015) | (15,379) | ||||||
Free cash flow1 | $ | (135,415) | $ | (101,344) |
1 Free cash flow is a non-GAAP measure. See "Non-GAAP Measures". |
Schedule 7
Segmented Gross Margin and Segmented Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure)2 | |||||
Three months ended September 30, | |||||
(in thousands of Canadian dollars except where indicated; unaudited) | 2022 | 2021 | |||
Canada cannabis segment | |||||
Net revenue | $ | 52,304 | $ | 71,672 | |
Gross margin, as reported | $ | (7,652) | (91,980) | ||
Gross margin percentage, as reported | (15) % | (128) % | |||
Adjustments to gross margin: | |||||
Charges related to the flow-through of inventory | - | 3,123 | |||
Adjusted gross margin1 | $ | (7,652) | $ | (88,857) | |
Adjusted gross margin percentage1 | (15) % | (124) % | |||
Rest-of-world cannabis segment | |||||
Revenue | $ | 10,552 | $ | 23,653 | |
Gross margin, as reported | (1,332) | 10,978 | |||
Gross margin percentage, as reported | (13) % | 46 % | |||
Adjustments to gross margin: | |||||
Restructuring costs recorded in cost of goods sold | 3,730 | - | |||
Adjusted gross margin1 | $ | 2,398 | $ | 10,978 | |
Adjusted gross margin percentage1 | 23 % | 46 % | |||
Storz & Bickel segment | |||||
Revenue | $ | 13,494 | $ | 14,511 | |
Gross margin, as reported | 6,002 | 5,351 | |||
Gross margin percentage, as reported | 44 % | 37 % | |||
Adjusted gross margin1 | $ | 6,002 | $ | 5,351 | |
Adjusted gross margin percentage1 | 44 % | 37 % | |||
BioSteel segment | |||||
Revenue | $ | 29,922 | $ | 7,512 | |
Gross margin, as reported | 4,432 | (404) | |||
Gross margin percentage, as reported | 15 % | (5) % | |||
Adjustments to gross margin: | |||||
Restructuring costs recorded in cost of goods sold | 3,201 | - | |||
Adjusted gross margin1 | $ | 7,633 | $ | (404) | |
Adjusted gross margin percentage1 | 26 % | (5) % | |||
This Works segment | |||||
Revenue | $ | 6,868 | $ | 9,027 | |
Gross margin, as reported | 2,303 | 3,558 | |||
Gross margin percentage, as reported | 34 % | 39 % | |||
Adjustments to gross margin: | |||||
Restructuring costs recorded in cost of goods sold | 1,092 | - | |||
Adjusted gross margin1 | $ | 3,395 | $ | 3,558 | |
Adjusted gross margin percentage1 | 49 % | 39 % | |||
1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See "Non-GAAP Measures". |
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SOURCE Canopy Growth Corporation