Full Press Release Details
Canopy Growth drives revenue with 94%
increase in recreational dried cannabis sales in first quarter of fiscal 2020
Adjusted EBITDA up more
than $5M (CDN) versus prior quarter;
Company positioned to bring CBD products to U.S. market by end of fiscal 2020;
Record harvest of over 40,000 kg
Generated net revenue1
of $90.5 million in Q1 2020.
Adjusted EBITDA of $(92.0M)
up $5.7M versus Q4 2019 inclusive of investments in US CBD expansion activity.
Increased dried cannabis
sales in the Canadian recreational market by 94% over Q4 2019.
Harvested 40,960 kilograms
exceeding expectations in the quarter, an increase of 183% over Q4 2019.
Increased international
medical cannabis revenue by 209% versus Q1 2019.
Filed 56 patent applications
in the quarter, bringing the company's patent portfolio to an industry-leading 111 patents and 270 patent applications.
On track to unveil portfolio
of value-add, higher-margin products in various form factors in October 2019.
One-time, non-cash charge
on extinguishment of warrant liability biggest contributor to net loss in the quarter.
Canopy Growth drives revenue with 94% increase
in recreational dried cannabis sales in first quarter of fiscal 2020 (CNW Group/Canopy Growth Corporation)
SMITHS FALLS, ON, Aug. 14, 2019 /CNW/ - Canopy
Growth Corporation ("Canopy Growth" or the "Company") (TSX: WEED) (NYSE: CGC) today announced its financial
results for the first quarter ended June 30, 2019. All financial information in this press release is reported in Canadian dollars,
unless otherwise indicated. This press release is intended to be read in conjunction with the Company's Condensed Interim Consolidated
Financial Statements and Management Discussion & Analysis for the three months ended June 30, 2019, which and will be filed
on SEDAR (www.sedar.com) and will be available at www.canopygrowth.com.
In first quarter fiscal 2020, Canopy Growth
harvested 40,960 kg of product, surpassing its previous estimate of 34,000 kilograms. The Q1 harvest is the first full-scale harvest
since the retrofitting of its large-scale greenhouse facilities started in calendar 2018, and with a majority of the work completed
at Mirabel, Delta, and Aldergrove facilities, the Company is now shifting its focus to optimizing these facilities for yield and
cost. The Company believes these efforts will contribute to both revenue growth and gross margin improvements in coming months.
The recent Q1 harvest demonstrates the Company's ability to scale production of 'high-THC' strains of cannabis, representing over
70% of the harvest, which positions the Company to better meet the burgeoning demand for high-THC products in retail. The
Company also saw a steady increase of recreational retail sales which continues to be the primary channel for reaching new consumers.
"The Company has two primary objectives
as we complete Q1 2020 and look to the remainder of the fiscal year," said Mark Zekulin, CEO, Canopy Growth. "First,
the Company remains focused on laying the foundation for dominance in an emerging global opportunity. This means investments in
developing intellectual property, building brands, building international reach, and ensuring scaled production capability for
current and future products. Second, we are fixated on the process of evolving from builders to operators over the remainder
of this fiscal year, meaning that as our expansion program comes to a close in Canada, and as new value-add products come to market
in Canada, we demonstrate a sustainable, high margin, profitable Canadian business."
"Fiscal 2020 is going to be another exciting
time for the cannabis industry as we close in on the launch of new product formats. Our recent harvests are proof that our
focus on operational excellence is working, and we look forward to showing both our Canadian and U.S. customers what we've been
working on behind the scenes to prepare for the next wave of products coming later this year," said Zekulin. "Internationally
we are now executing on the infrastructure we have spent the last several years building, with just under 1,000 kg or kg equivalents
of dried flower, oil and softgel products exported from Canada since April 1, and domestic, commercial production now underway
in Germany (C3), Denmark (Spectrum Therapeutics) and the United States (CBD only)."
In Canada, the Company believes that macro
events are increasingly relevant to its performance today and through the remainder of the fiscal year. Having built an ambitious
sales and operations structure, the Company looks forward to the successful launch of new cannabis formats and an acceleration
in store openings across the country. Today, both Ontario and Quebec - Canada's two most populous provinces - have
one store for every 595,000 and 495,000 people, respectively, versus a saturation rate in Colorado, for example, of 10,000. The
Company as such applauds announcements by both provinces to license further retail locations. The Company will continue to
examine alignment of its strategy to market dynamics as the Canadian retail landscape unfolds, but remains confident in its Canadian
plans today, the long-term potential of the Canadian market, and Canopy's positioning to succeed as the market develops.
In the United States market, our team has been
actively developing a range of high-quality CBD products and product marketing plans and securing the production resources necessary
to bring products to the U.S. market by the end of this fiscal year. The Company has developed a broad CBD product offering that
includes skincare and cosmetics, topical creams, vape products, beverages, edibles, oils and softgels, and remains on track to
unveil CBD products this fiscal year.
The Company has been working since this past
January to identify and contract a robust, scalable supply chain to get CBD products into the market. In addition to the
thousands of acres of hemp planted in the United States, the U.S. team has already procured quantities of hemp biomass for processing.
The Company's supply chain will be augmented, starting next fiscal year, by corporate assets including extraction and production
resources at the Company's facility in Kirkwood, New York as well as additional manufacturing facilities for producing vape and
beverage products, in select locations in the United States. The Company has already begun work on these facilities, though all
locations have not yet been announced.
To stand up a new CBD business in the United
States, the Company has made significant pre-revenue investments in building a strong team, having established offices in California
and Colorado over the past two quarters, with additional offices coming in Illinois and New York. Further, significant headquarters
resources, as reflected in Adjusted EBITDA losses attributed to corporate operations below, are devoted to U.S. and global expansion
| First Quarter Fiscal 2020 Financial and Operational Summary | ||||||
| Q1 | Q1 | % | ||||
| (CDN millions, except where indicated) | 2020 | 2019 | Change | |||
| Gross revenue 1 | $ | 103.4 | $ | 25.9 | 299% | |
| Net revenue 2 | $ | 90.5 | $ | 25.9 | 249% | |
| Gross margin percentage, before fair value impacts in cost of sales 3 | 15% | 43% | -28% | |||
| Operating expenses 4 | $ | 229.2 | $ | 72.7 | 215% | |
| Adjusted EBITDA 5 | $ | (92.0) | $ | (22.5) | 309% | |
| Attributed as follows: | ||||||
| - Operations and corporate overhead | $ | (57.8) | $ | (11.6) | 398% | |
| - Strategic investments and business development | $ | (18.0) | $ | (1.9) | 847% | |
| - Non-operating or under-utilized facilities | $ | (16.2) | $ | (9.0) | 80% | |
| Loss on extinguishment of warrants 6 | $ | (1,176.4) | $ | - | NM | |
| Net loss | $ | (1,281.2) | $ | (91.0) | 1308% | |
| Kilograms harvested (kilograms) | 40,960 | 9,685 | 323% | |||
| Inventory and biological assets | $ | 496.6 | $ | 341.1 | 46% | |
| Cash, cash equivalents and marketable securities | $ | 3,140.9 | $ | 4,515.0 | -30% |
| NM = Not Meaningful |
| 1 Includes other revenue adjustments which represent the Company's estimate of variable consideration that may result from rights of return, and which primarily relate to oils and gelcaps. |
| 2 Includes other revenue adjustments, and the impact from other revenue adjustments on excise taxes. |
| 3 Gross margin percentage, before fair value impacts in cost of sales, is a non-IFRS measure. See "Non-IFRS Measures" below. |
| 4 Includes a total of $100.1 million of share-based compensation expense and depreciation and amortization, which are non-cash expenses. |
| 5 Adjusted EBITDA is a non-IFRS measure. See "Non-IFRS Measures" below. |
| 6 Relates to a non-cash loss on the extinguishment of warrants held by Constellation upon the amendment of the Investor Rights Agreement between Canopy Growth and Constellation. |
| First Quarter Fiscal 2020 Revenue Highlights | |||||
| Q1 | Q1 | % | |||
| (CDN millions) | 2020 | 2019 | Change | ||
| Canadian recreational cannabis revenue - Business to business 1 | $ | 50.4 | $ | - | NM |
| Canadian recreational cannabis revenue - Business to consumer | $ | 10.6 | $ | - | NM |
| Canadian medical cannabis revenue | $ | 13.1 | $ | 21.3 | -38% |
| Canadian cannabis gross revenue | $ | 74.1 | $ | 21.3 | 248% |
| International medical cannabis revenue | $ | 10.5 | $ | 3.4 | 209% |
| Cannabis gross revenue | $ | 84.6 | $ | 24.7 | 243% |
| Other revenue | $ | 18.8 | $ | 1.2 | 1467% |
| Gross revenue | $ | 103.4 | $ | 25.9 | 299% |
| Excise taxes 2 | $ | 12.9 | $ | - | NM |
| Net revenue | $ | 90.5 | $ | 25.9 | 249% |
| 1 Includes other revenue adjustments which represent the Company's estimate of variable consideration that may result from rights of return, and which primarily relate to oils and gelcaps. |
| 2 Excise taxes is presented net of the impact from other revenue adjustments. |
| First Quarter Fiscal 2020 Product Sales Highlights | ||||||
| Q1 | Q1 | % | ||||
| (CDN millions, except where indicated) | 2020 | 2019 | Change | |||
| Recreational | ||||||
| Dry cannabis sales (kilograms) | 7,673 | - | NM | |||
| Dry cannabis revenue | $ | 60.8 | $ | - | NM | |
| Cannabis oil and softgels sales (kilogram equivalents) | 1,387 | - | NM | |||
| Cannabis oil and softgels revenue 1 | $ | 0.2 | $ | - | NM | |
| Medical | ||||||
| Dry cannabis sales (kilograms) | 807 | 2,244 | -64% | |||
| Dry cannabis revenue | $ | 7.2 | $ | 18.4 | -61% | |
| Cannabis oil and softgels sales (kilogram equivalents) | 682 | 451 | 51% | |||
| Cannabis oil and softgels revenue | $ | 16.4 | $ | 6.3 | 160% |
Canopy Growth sold 10,549 kilograms and kilogram
equivalents in Q1 2020, up 13% over Q4 2019. In Q1 2020, the Company generated gross revenue of $60.8 million from the sale
of dry flower format products in the Canadian recreational market, representing an increase of 88% from dried flower sales in Q4
2019. Included in dried cannabis sales in Q1 2020 are sales of 1.4 million higher-margin, pre-rolled cannabis products which represented
$9.7 million - or 16% - of our total recreational cannabis revenue.
In Q1 2020, the Company generated gross revenue
in the medical market totaling $23.6 million, of which $16.4 million dollars or 70% of gross medical revenue was generated by oil
sales. Oil sales in the medical market include sales by subsidiary C3, as well as the Company's traditional finished
oils and softgels. Dried flower sales accounted for $7.2 million dollars of gross medical revenue.
During Q1 2020, we evaluated the form, strain,
and estimated on-hand provincial and territorial inventory levels against the recent demand and sales trends that have been observed
in the recreational market to ensure we make adjustments to our supply chain based on the purchasing preferences of recreational
consumers. As a result of this evaluation, we believe that the risk of an over-supply of certain oil and softgel formats
may exist in certain markets due, in part, to incomplete retail platforms in most provinces. Based on this assessment, we
have estimated variable consideration that may result from rights of return in the amount of $8 million dollars in gross revenue,
which corresponds to estimated future returns of $6.4 million, net of excise tax, and the estimated return amount has been reflected
First Quarter Fiscal 2020 Gross Margin (before
the fair value impacts in cost of sales) Overview (See Non-IFRS Measures)
Gross margin before fair value impacts in cost