Comunicato stampa

Canopy Growth Reports Second Quarter Fiscal 2021 Financial Results

09 novembre 2020 | 12.01

LETTURA: 24 minuti

Achieved record quarterly net revenue of $135 million

Net Loss of $97 million; Adjusted EBITDA loss of $86 million, a 43% improvement versus Q2 FY20

Implementing initiatives to capture $150-$200 million of savings across our cost structure

Increased market share by 200 basis points in Canadian recreational market based on our proprietary market share tracker

Building momentum in the U.S. and establishing foundation for long-term leadership position

SMITHS FALLS, ON, Nov. 9, 2020 /PRNewswire/ -- Canopy Growth Corporation ("Canopy Growth" or the "Company") (TSX: WEED) (NYSE: CGC) today announced its financial results for the second quarter fiscal 2021 ended September 30, 2020. All financial information in this press release is reported in millions of Canadian dollars, unless otherwise indicated.

"Our renewed strategy of winning consumer mindshare, along with increased agility and execution, has resulted in record net revenue for the second quarter and momentum across key areas of business," said David Klein, CEO. "Canopy Growth is positioned for continued growth as we establish a strong leadership position that is showcased through our vast portfolio of differentiated brands and products – including our industry leading cannabis-infused beverages."

"We saw another quarter of improvement in our operating expense ratio while our marketing and R&D investments are being re-directed to drive sales," added Mike Lee, CFO. "Importantly, our end-to-end review has identified cost savings opportunities in the range of $150-$200 million across cost of goods sold, general and administrative expenses, and inventory, and efforts are underway to quickly capture value. Leveraging ongoing improvements across our business, we are accelerating our path to profitability, notably in our largest market, Canada."

Second Quarter Fiscal 2021 Financial Summary

	Net revenue	Gross marginpercentage	Net loss	AdjustedEBITDA¹	Free cash flow²
Reported	$135.3	19%	$(96.6)	$(85.7)	$(190.4)
vs. Q2 2020	77%	1,400 bps	(140%)	43%	57%

¹ Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures".
²Free cash flow is a non-GAAP measure. See "Non-GAAP Measures".

Second Quarter Fiscal 2021 Corporate Financial Highlights

Business & Operational Highlights

Second Quarter Fiscal 2021 Financial and Operational Review

Revenue by Channel

(in millions of Canadian dollars, unaudited)	Q2 2021	Q2 2020	vs. Q2 2020

Canadian recreational net revenue
- Business to business¹	$42.2	$8.8	380%
- Business to consumer	$18.7	$13.1	43%
	$60.9	$21.9	178%
Canadian medical net revenue²	$13.9	$13.0	7%
International medical revenue	$17.5	$18.1	(3%)
	$31.4	$31.1	1%
Cannabis net revenue	$92.3	$53.0	74%

All other revenue	$43.0	$23.6	82%
Net revenue	$135.3	$76.6	77%

¹ Reflects excise taxes of $14.2 million and other revenue adjustments of $3.8 million for Q2 2021 (Q2 2020 - $7.8 million and $32.7 million, respectively).
² Reflects excise taxes of $1.4 million (Q2 2020 - $1.2 million).

Revenue by Form

(in millions of Canadian dollars, unaudited)	Q2 2021	Q2 2020	vs. Q2 2020

Canadian recreational net revenue
- Dry bud¹	$63.9	$59.0	8%
- Oils and softgels¹	$7.0	$3.4	106%
- Cannabis 2.0 products²	$8.0	$-	NM
- Other revenue adjustments³	$(3.8)	$(32.7)	88%
- Excise taxes	$(14.2)	$(7.8)	(82%)
	$60.9	$21.9	178%
Global medical net revenue
- Dry bud	$9.0	$9.6	(6%)
- Oils and softgels	$23.1	$22.7	2%
- Cannabis 2.0 products²	$0.7	$-	NM
- Excise taxes	$(1.4)	$(1.2)	(17%)
	$31.4	$31.1	1%
Cannabis net revenue	$92.3	$53.0	74%

All other revenue	$43.0	$23.6	82%
Net revenue	$135.3	$76.6	77%

¹ Excludes the impact of other revenue adjustments.
² Cannabis 2.0 products include cannabis-infused chocolates, cannabis-infused beverages, and cannabis vape products (including power sources such as rechargeable and compact batteries, ready-to-go vape pens, and cartridges/vape pods)
³ Other revenue adjustments represent the Company's determination of returns and pricing adjustments, and relate to the Canadian recreational business-to-business channel.

Canadian Cannabis

International Cannabis

Strategic Businesses

The second quarter fiscal 2021 and second quarter fiscal 2020 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 Mike Lee, CFO at 10:00 AM Eastern Time on November 9, 2020.

Webcast Information

A live audio webcast will be available at: https://produceredition.webcasts.com/starthere.jsp?ei=1384068&tp_key=9317fbfde9

Replay Information

A replay will be accessible by webcast until 11:59 PM ET on February 7, 2021 at: https://produceredition.webcasts.com/starthere.jsp?ei=1384068&tp_key=9317fbfde9

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 (loss) income, 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; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition-related costs. The Adjusted EBITDA 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.

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 Quarterly Report on Form 10-Q to be filed with the SEC.

About Canopy Growth Corporation

Canopy Growth (TSX:WEED, NYSE:CGC) is a world-leading diversified cannabis, hemp and cannabis device company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms, as well as medical devices through the Company's subsidiary, Storz & Bickel GMbH & Co. KG. From product and process innovation to market execution, Canopy Growth is driven by a passion for leadership and a commitment to building a world-class cannabis company one product, site and country at a time. The Company has operations in over a dozen countries across five continents.

The Company's medical division, Spectrum Therapeutics is proudly dedicated to educating healthcare practitioners, conducting robust clinical research, and furthering the public's understanding of cannabis, and has devoted millions of dollars toward cutting edge, commercializable research and IP development. Spectrum Therapeutics sells a range of full-spectrum products using its colour-coded classification Spectrum system as well as single cannabinoid Dronabinol under the brand Bionorica Ethics.

The Company operates retail stores across Canada under its award-winning Tweed and Tokyo Smoke banners. Tweed is a globally recognized cannabis brand which has built a large and loyal following by focusing on quality products and meaningful customer relationships.

From our public listing on the Toronto Stock Exchange and New York Stock Exchange to our continued international expansion, pride in advancing shareholder value through leadership is engrained in all we do at Canopy Growth. Canopy Growth has established partnerships with leading sector names including cannabis icons Snoop Dogg and Seth Rogen, breeding legends DNA Genetics and Green House Seeds, and Fortune 500 alcohol leader Constellation Brands, to name but a few. For more information visit www.canopygrowth.com.

Notice Regarding Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of applicable securities laws, which involve certain known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as "intend," "goal," "strategy," "estimate," "expect," "project," "projections," "forecasts," "plans," "seeks," "anticipates," "potential," "proposed," "will," "should," "could," "would," "may," "likely," "designed to," "foreseeable future," "believe," "scheduled" and other similar expressions. Our actual results or outcomes may differ materially from those anticipated. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

Forward-looking statements include, but are not limited to, statements with respect to:

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; (x) our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xi) our ability to conduct operations in a safe, efficient and effective manner; (xii) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; (xiii) our ability to continue to operate in light of the COVID-19 pandemic and the impact of the pandemic on demand for, and sales of, our products and our distribution channels; and (xiv) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.

By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release and other reports we file with, or furnish to, the Securities and Exchange Commission (the "SEC") and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, the risk that the COVID-19 pandemic may disrupt our operations and those of our suppliers and distribution channels and negatively impact the use of our products; consumer demand for cannabis and U.S. hemp products; 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 revenues; our ability to manage disruptions in credit markets or changes to our credit rating; 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; 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); the potential effects of judicial or other proceedings on our business, financial condition, results of operations and cash flows; volatility in and/or degradation of general economic, market, industry or business conditions; 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, 2020 filed with the SEC on June 1, 2020. 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.

CANOPY GROWTH CORPORATION CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (in thousands of Canadian dollars, except number of shares and per share data, unaudited)

	September 30, 2020	March 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$673,287	$1,303,176
Short-term investments	1,048,921	673,323
Restricted short-term investments	14,332	21,539
Amounts receivable, net	79,668	90,155
Inventory	398,454	391,086
Prepaid expenses and other assets	77,227	85,094
Total current assets	2,291,889	2,564,373
Equity method investments	25,663	65,843
Other financial assets	381,878	249,253
Property, plant and equipment	1,495,143	1,524,803
Intangible assets	437,344	476,366
Goodwill	1,933,476	1,954,471
Other assets	8,337	22,636
Total assets	$6,573,730	$6,857,745

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$81,064	$123,393
Other accrued expenses and liabilities	83,064	64,994
Current portion of long-term debt	13,272	16,393
Other liabilities	147,060	215,809
Total current liabilities	324,460	420,589
Long-term debt	520,424	449,022
Deferred income tax liabilities	39,569	47,113
Liability arising from Acreage Arrangement	147,000	250,000
Warrant derivative liability	221,948	322,491
Other liabilities	167,267	190,660
Total liabilities	1,420,668	1,679,875
Commitments and contingencies
Redeemable noncontrolling interest	83,900	69,750
Canopy Growth Corporation shareholders' equity:
Common shares - $nil par value; Authorized - unlimited number of shares;Issued - 372,046,111 shares and 350,112,927 shares, respectively	6,745,255	6,373,544
Additional paid-in capital	2,533,112	2,615,155
Accumulated other comprehensive income	103,306	220,899
Deficit	(4,463,798)	(4,323,236)
Total Canopy Growth Corporation shareholders' equity	4,917,875	4,886,362
Noncontrolling interests	151,287	221,758
Total shareholders' equity	5,069,162	5,108,120
Total liabilities and shareholders' equity	$6,573,730	$6,857,745

CANOPY GROWTH CORPORATION CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of Canadian dollars, except number of shares and per share data, unaudited)

	Three months endedSeptember 30,		Six months endedSeptember 30,
	2020	2019	2020	2019
Revenue	$150,828	$85,621	$269,916	$189,012
Excise taxes	15,562	9,008	24,234	21,917
Net revenue	135,266	76,613	245,682	167,095
Cost of goods sold	109,186	72,970	213,107	145,162
Gross margin	26,080	3,643	32,575	21,933
Operating expenses:
Selling, general and administrative expenses	147,253	181,601	282,645	327,248
Share-based compensation	21,984	92,881	52,669	180,243
Expected credit losses on financial assets and related charges	94,745	-	94,745	-
Asset impairment and restructuring costs	46,363	-	59,157	-
Total operating expenses	310,345	274,482	489,216	507,491
Operating loss	(284,265)	(270,839)	(456,641)	(485,558)
Loss from equity method investments	(32,991)	(2,171)	(40,180)	(4,004)
Other income (expense), net	221,256	509,893	269,461	542,661
(Loss) income before income taxes	(96,000)	236,883	(227,360)	53,099
Income tax (expense) recovery	(552)	5,767	2,486	(4,500)
Net (loss) income	(96,552)	242,650	(224,874)	48,599
Net loss attributable to noncontrolling interests and redeemable noncontrolling interest	(64,491)	(16,268)	(84,312)	(24,450)
Net (loss) income attributable to Canopy Growth Corporation	$(32,061)	$258,918	$(140,562)	$73,049

Basic (loss) earnings per share	$(0.09)	$0.75	$(0.38)	$0.21
Basic weighted average common shares outstanding	371,520,534	347,226,921	367,663,135	346,028,903

Diluted (loss) earnings per share	$(0.09)	$0.25	$(0.38)	$0.19
Diluted weighted average common shares outstanding	371,520,534	380,323,118	367,663,135	382,765,533

CANOPY GROWTH CORPORATION CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of Canadian dollars, unaudited)

	Six months ended September 30,
	2020	2019
Cash flows from operating activities:
Net loss	$(224,874)	$48,599
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property, plant and equipment	36,373	29,813
Amortization of intangible assets	29,432	15,955
Share of loss on equity method investments	40,180	4,004
Share-based compensation	52,669	180,243
Asset impairment and restructuring costs	59,157	-
Expected credit losses on financial assets and related charges	94,745	-
Income tax (recovery) expense	(2,486)	4,500
Non-cash foreign currency	(17,756)	(1,463)
Interest paid	(12,837)	(12,750)
Change in operating assets and liabilities, net of effects from purchases of businesses:
Amounts receivable	1,498	11,390
Prepaid expenses and other assets	(6,604)	(50,224)
Inventory	(23,500)	(143,229)
Accounts payable and accrued liabilities	(11,408)	10,584
Other, including non-cash fair value adjustments	(294,884)	(469,507)
Net cash used in operating activities	(280,295)	(372,085)
Cash flows from investing activities:
Purchases of and deposits on property, plant and equipment	(90,195)	(440,150)
Purchases of intangible assets	(7,604)	(9,538)
Proceeds on sale of intangible assets	18,337	-
(Purchases) redemption of short-term investments	(367,779)	388,027
Investments in equity method investments	-	(4,719)
Investments in other financial assets	(7,526)	(36,423)
Investment in Acreage Arrangement	(49,849)	(395,190)
Loan advanced to Acreage Hempco	(66,995)	-
Recovery of amounts related to construction financing	10,000	-
Payment of acquisition related liabilities	(6,394)	(21,447)
Net cash outflow on acquisition of noncontrolling interests	(125)	-
Net cash outflow on acquisition of subsidiaries	-	(416,028)
Net cash used in investing activities	(568,130)	(935,468)
Cash flows from financing activities:
Payment of share issue costs	(677)	(129)
Proceeds from issuance of shares by Canopy Rivers	92	156
Proceeds from exercise of stock options	10,756	36,023
Proceeds from exercise of warrants	244,990	446
Issuance of long-term debt	1,564	5,278
Repayment of long-term debt	(5,920)	(104,282)
Net cash provided by (used in) financing activities	250,805	(62,508)
Effect of exchange rate changes on cash and cash equivalents	(32,269)	(8,305)
Net decrease in cash and cash equivalents	(629,889)	(1,378,366)
Cash and cash equivalents, beginning of period	1,303,176	2,480,830
Cash and cash equivalents, end of period	$673,287	$1,102,464


Adjusted EBITDA¹ Reconciliation (Non-GAAP Measure)
	Three months ended September 30,
(in thousands of Canadian dollars, unaudited)	2020	2019
Net (loss) income	$(96,552)	$242,650
Income tax expense (recovery)	552	(5,767)
Other (income) expense, net	(221,256)	(509,893)
Loss on equity method investments	32,991	2,171
Share-based compensation²	21,984	92,881
Acquisition-related costs	3,472	2,562
Depreciation and amortization²	31,758	25,016
Asset impairment and restructuring costs	46,363	-
Expected credit losses on financial assets and related charges	94,745	-
Charges related to the flow-through of inventory step-up on business combinations	281	-
Adjusted EBITDA¹	$(85,662)	$(150,380)

¹Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures".
²From Condensed Interim Consolidated Statements of Cash Flows.


Free Cash Flow Reconciliation¹
	Three months ended September 30,
(in thousands of Canadian dollars, unaudited)	2020	2019
Net cash used in operating activities	$(161,749)	$(213,795)
Purchases of and deposits on property, plant and equipment	(28,648)	(228,326)
Free cash flow¹	$(190,397)	$(442,121)

¹Free cash flow is a non-GAAP measure. See "Non-GAAP Measures".

Contact: Laura Nadeau, Media Relations, media@canopygrowth.com; Judy Hong, Vice President, Investor Relations & Competitive Intelligence, Judy.hong@canopygrowth.com; Tyler Burns, Director, Investor Relations, Tyler.burns@canopygrowth.com