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Canopy Growth Corporation (CGC) Reports First Quarter Fiscal 2021 Financial Results

Canopy Growth Reports First Quarter Fiscal 2021 Financial Results
Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (NYSE: CGC) today announced its financial results for the first quarter fiscal 2021 ended June 30, 2020. All financial information in this press release is reported in millions of Canadian dollars, unless otherwise indicated.
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“We’re proud of our strong first-quarter performance, despite unprecedented volatility and uncertainty in the market and across the globe,” said David Klein, CEO. “We grew our revenue year-over-year and are seeing market share improvement, notably achieving number one market share in cannabis-infused beverages in the Canadian market. We are implementing a renewed corporate strategy with the appointment of a new leadership team which will focus on delivering quality products to our consumers, positioning our business for continued growth. The proposed retooled Acreage announcement refocuses our entry for the evolving U.S. market, where we are seeing increased momentum.”
“Following our previously announced restructuring actions, we have substantially reduced our expense and cash burn in this quarter in addition to reducing headcount by over 18% since beginning of this calendar year. Our marketing and R&D investments are being re-allocated to programs with high-return potential in order to drive sales,” added Mike Lee, CFO. “Our gross margins in the quarter came in below our expectations due to under-utilization of our large-scale infrastructure. We’ve already proven we can deliver 40%-plus gross margin and are confident that we can return to that level as we work toward higher capacity utilization across our facilities as demand for our cannabis products continue to grow. In the meantime, we are focused on further optimizing our operating footprint through a full end-to-end strategy that looks at people, process, technology, and infrastructure that we believe will lead to best in class margins over time.”
First Quarter Fiscal 2021 Financial Summary
Net revenue
Gross margin
percentage
Adjusted
gross margin
percentage1
Net loss
Adjusted
EBITDA2
Free cash
flow3
Reported
$110.4
6%
7%
$(128.3)
$(92.2)
$(180.1)
vs. Q1 2020
22%
(1,400) bps
(1,300 bps)
34%
1%
51%
1 Adjusted gross margin percentage is a non-GAAP measure. See “Non-GAAP Measures”.
2 Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures”.
3 Free cash flow is a non-GAAP measure. See “Non-GAAP Measures”.
First Quarter Fiscal 2021 Corporate Financial Highlights
Revenues: Net revenue in Q1 2021 increased by 22% versus Q1 2020 driven by higher medical cannabis sales in Canada and Germany, strong Storz & Bickel (“S&B”) vaporizer sales and the benefit of a full quarter of contribution from acquired businesses C3 (acquired in April 2019) and This Works (acquired in May 2019) that were reflected for a full quarter in Q1 2021. Excluding the impact from acquired businesses, net sales growth increased 9% versus Q1 2020. The growth was partially offset by a decline in Canadian Recreational cannabis revenue due to restricted retail operating environment in response to the COVID-19 pandemic and increased competition in dried flower-based products.
Gross margin: Gross margin was 6%. Adjusted gross margin, excluding inventory step-up costs, was 7%, down 1,300 bps versus Q1 2020. Gross margin was impacted by lower production output as well as manufacturing variances and inventory adjustments.
Operating expenses: Total SG&A expenses declined by 23% versus Q1 2020, driven by year-over-year reductions in Sales & Marketing expenses, partially offset by higher General & Administrative (G&A) and Research & Development (“R&D”) expenses. Sales & Marketing expense decline of 25% reflects lower compensation expenses resulting from corporate restructuring actions taken earlier in the year, delayed or cancelled marketing activities and reduced travel-related expenses due to the COVID-19 pandemic. G&A expenses increased 2%, while R&D expenses rose 61% mainly driven by research studies that commenced in Q2 and Q3 2020 and increased activities to support Cannabis 2.0 product development. Share-based Compensation expenses decreased 65% over Q1 2020.
Net Loss: Net loss of $128 million in Q1 2021, a $66 million narrower loss versus Q1 2020, was driven by higher revenue and lower SG&A expenses.
Adjusted EBITDA: Adjusted EBITDA loss was $92 million in Q1 2021, compared to a loss of $93 million in Q1 2020.
Cash Position: Cash and Short-term Investments amounted to $2.0 billion at June 30, 2020, unchanged from $2.0 billion at March 31, 2020 reflecting the investment of approximately $245 million by an indirect wholly-owned subsidiary of Constellation Brands (NYSE:STZ) to exercise warrants in the Company offset by the EBITDA loss and capital investments.
Business & Operational Highlights
Significant progress on our strategic priorities and organizational design: Key activities included implementing new organizational structure and aligning resources to reflect a new strategy, initiating end to end supply chain review, and rolling out dried flower quality improvement programs.
Strengthened competitive positioning in Canada recreational market:
Stepped up activities in the U.S. market to drive accelerated revenue growth:
The Company and Acreage Holdings, Inc. (“Acreage”) entered into a proposal agreement to amend the terms of the existing arrangement between the Company and Acreage (the “Amended Arrangement”), that reaffirms the Company’s path to the U.S. THC market when federally permissible; the Amended Arrangement is subject to, among other things, Acreage shareholder approval and court approval.
Continuing to assess the impact of the COVID-19 pandemic, with a focus on the health and safety of our employees, business continuity and supporting our communities. To date, there has been minimal disruption to production and supply chain, all of our 22 corporate-owned retail stores have re-opened and our liquidity position remains strong.
First Quarter Fiscal 2021 Financial and Operational Review
Revenue by Channel
(in millions of Canadian dollars, unaudited)
Q1 2021
Q1 2020
vs. Q1 2020
Canadian recreational net revenue
– Business to business1
$34.9
$38.9
(10%)
– Business to consumer
$9.3
$10.6
(12%)
Canadian recreational net revenue
$44.2
$49.5
(11%)
Canadian medical net revenue2
$13.9
$11.7
19%
International medical revenue
$20.2
$10.5
92%
All other revenue
$32.1
$18.8
71%
Net revenue
$110.4
$90.5
22%
1 Includes excise taxes of $7.2 million (Q1 2020 – $11.5 million).
2 Includes excise taxes of $1.4 million (Q1 2020 – $1.4 million).
Revenue by Form
(in millions of Canadian dollars, unaudited)
Q1 2021
Q1 2020
vs. Q1 2020
Canadian recreational revenue
– Dry bud1
$40.1
$60.8
(34%)
– Oils and softgels1
$7.7
$8.2
(6%)
– Cannabis 2.0 products2
$7.0
$-
NM
– Other revenue adjustments3
$(3.4)
$(8.0)
58%
– Excise taxes
$(7.2)
$(11.5)
37%
$44.2
$49.5
(11%)
Global medical revenue
– Dry bud
$10.2
$7.2
42%
– Oils and softgels
$25.0
$16.4
52%
– Cannabis 2.0 products2
$0.3
$-
NM
– Excise taxes
$(1.4)
$(1.4)
0%
$34.1
$22.2
54%
All other revenue
$32.1
$18.8
71%
Net revenue
$110.4
$90.5
22%
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
Canadian medical revenue increased 19% from Q1 2020. The year-over-year increase due primarily to the prior year quarter being impacted by the transition of medical customers to the Spectrum Therapeutics online store and limited supply of medical cannabis medical products, as well as higher average basket size we saw in Q1 2021.
Recreational B2C net sales declined 12% over the comparative period due primarily to the restricted cannabis retail operating environment in response to the COVID-19 pandemic, including full closure of our corporate owned store for the first half of Q1 2021, and upon reopening with click & collect/curbside pick up and reduced hours.
Recreational B2B net sales declined by 10% from Q1 2020 primarily as a result of increased competition driving lower market share in dried flower, partially offset by new cannabis 2.0 products and reduced provisions for returns.
International Cannabis
C3 revenue in Q1 2021 increased 75% over Q1 2020 due to the recognition of a full quarter of revenue in Q1 2021 (compared to approximately two months of revenue in Q1 2020 following the acquisition of C3 by the Company in April 2019) and growth of the Dronabinol market in Germany. C3 revenue increased by 17% on an organic basis, adjusted for the timing of acquisitions.
Dried flower sales in Germany grew 181% in Q1 2021 over Q1 2020 due to increased supply and patient demand.
Strategic Acquisitions
S&B vaporizer revenue in Q1 2021 increased 74% over Q1 2020, benefiting from expanded distribution in the United States and broader product portfolio.
This Works sales in Q1 2021 increased 160% over Q1 2020 due in part to the recognition of a full quarter of revenue in Q1 2021 (compared to less than a month of revenue in Q1 2020 following the acquisition of This Works by the Company in May 2020). This Works sales declined by 13% on an organic basis, mainly due to the closure of retail stores as a result of the COVID-19 pandemic.
The first quarter fiscal 2021 and first 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 August 10, 2020.
Webcast Information
A live audio webcast will be available at:
https://produceredition.webcasts.com/starthere.jsp?ei=1343663&tp_key=96c72fd568
Replay Information
A replay of the call will be accessible by webcast, until 11:59 PM ET on November 8, 2020, at
https://produceredition.webcasts.com/starthere.jsp?ei=1343663&tp_key=96c72fd568
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, 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; 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.
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 charges related to the flow-through of inventory step-up associated with business combinations. Adjusted Gross Margin Percentage is calculated as Adjusted Gross Margin divided by Net Revenue. The Adjusted Gross Margin reconciliation is presented within this news release.
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’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:
the uncertainties associated with the COVID-19 pandemic, including our ability to continue operations, the ability of our suppliers and distribution channels to continue to operate, and the use of our products by consumers, and disruptions to the global and local economies due to related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations and a reduction in discretionary consumer spending;
laws and regulations and any amendments thereto applicable to our business and the impact thereof, including uncertainty regarding the application of U.S. state and federal law to U.S. hemp (including CBD) products and the scope of any regulations by the U.S. Federal Drug 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 regulation of the U.S. hemp industry in the U.S., including the promulgation of regulations for the U.S. hemp industry by the USDA;
expectations regarding the potential success of, and the costs and benefits associated with, our acquisitions, joint ventures, strategic alliances and equity investments;
the plan of arrangement with Acreage Holdings, Inc., as may be amended pursuant to the Proposal Agreement, including the consummation of such acquisition
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;
the ability to successfully create and launch brands and further create, launch and scale cannabis-based products and U.S. hemp-derived consumer products in jurisdictions where such products are legal and that we currently operate in;
the benefits, viability, safety, efficacy, dosing and social acceptance of cannabis, including CBD and other cannabinoids;
the anticipated benefits and impact of the CBI Group investments in us (the “CBI Group Investments”);
the potential exercise of the warrants held by the CBI Group, pre-emptive rights and/or top-up rights in connection with the CBI Group Investments, including proceeds to us that may result therefrom or the potential conversion of notes held by the CBI Group in connection with the CBI Group Investments;
expectations regarding the use of proceeds of equity financings, including the proceeds from the CBI Group Investments;
the legalization of the use of cannabis for medical or recreational in jurisdictions outside of Canada, the related timing and impact thereof and our intentions to participate in such markets, if and when such use is legalized;
our ability to execute on our strategy and the anticipated benefits of such strategy;
the ongoing impact of the legalization of additional cannabis product types and forms for recreational use in Canada, including federal, provincial, territorial and municipal regulations pertaining thereto, the related timing and impact thereof and our intentions to participate in such markets;
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 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 proceedings;
expectations with respect to future production costs;
expectations with respect to future sales and distribution channels;
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; and
expectations regarding the costs and benefits associated with our contracts and agreements with third parties, including under our third-party supply and manufacturing agreements.
Certain of the forward-looking statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.
The forward-looking statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including: (i) management’s perceptions of historical trends, current conditions and expected future developments; (ii) our ability to generate cash flow from operations; (iii) general economic, financial market, regulatory and political conditions in which we operate; (iv) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (v) consumer interest in our products; (vi) competition; (vii) anticipated and unanticipated costs; (viii) government regulation of our activities and products including but not limited to the areas of taxation and environmental protection; (ix) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; * our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xi) our ability to conduct operations in a safe, efficient and effective manner; (xii) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; (xiii) our ability to continue to operate in light of the COVID-19 pandemic and the impact of the pandemic on demand for, and sales of, our products and our distribution channels; and (xiv) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.
By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release and other reports we file with, or furnish to, the Securities and Exchange Commission (the “SEC”) and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, 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.
Schedule 1
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars, except number of shares and per share data, unaudited)
June 30,
2020
March 31,
2020
ASSETS
Current assets:
Cash and cash equivalents
$975,870
$1,303,176
Short-term investments
1,060,901
673,323
Restricted short-term investments
16,436
21,539
Amounts receivable, net
72,578
90,155
Inventory
389,800
391,086
Prepaid expenses and other assets
98,362
85,094
Total current assets
2,613,947
2,564,373
Equity method investments
58,654
65,843
Other financial assets
273,624
249,253
Property, plant and equipment
1,508,668
1,524,803
Intangible assets
444,199
476,366
Goodwill
1,929,418
1,954,471
Other assets
17,320
22,636
Total assets
$6,845,830
$6,857,745
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$89,368
$123,393
Other accrued expenses and liabilities
82,981
64,994
Current portion of long-term debt
22,570
16,393
Other liabilities
124,757
215,809
Total current liabilities
319,676
420,589
Long-term debt
477,836
449,022
Deferred income tax liabilities
45,816
47,113
Liability arising from Acreage Arrangement
285,000
250,000
Warrant derivative liability
287,122
322,491
Other liabilities
168,239
190,660
Total liabilities
1,583,689
1,679,875
Commitments and contingencies
Redeemable noncontrolling interest
81,600
69,750
Canopy Growth Corporation shareholders’ equity:
Common shares – $nil par value; Authorized – unlimited number of shares;
Issued – 370,865,639 shares and 350,112,927 shares, respectively
6,724,245
6,373,544
Additional paid-in capital
2,520,371
2,615,155
Accumulated other comprehensive income
152,415
220,899
Deficit
(4,431,737)
(4,323,236)
Total Canopy Growth Corporation shareholders’ equity
4,965,294
4,886,362
Noncontrolling interests
215,247
221,758
Total shareholders’ equity
5,180,541
5,108,120
Total liabilities and shareholders’ equity
$6,845,830
$6,857,745
Schedule 2
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 ended June 30,
2020
2019
Revenue
$119,088
$103,391
Excise taxes
8,672
12,909
Net revenue
110,416
90,482
Cost of goods sold
103,921
72,192
Gross margin
6,495
18,290
Operating expenses:
Selling, general and administrative expenses
135,392
145,647
Share-based compensation
30,685
87,362
Asset impairment and restructuring costs
12,794
–
Total operating expenses
178,871
233,009
Operating loss
(172,376)
(214,719)
Loss from equity method investments
(7,189)
(1,833)
Other income (expense), net
48,205
32,768
Loss before income taxes
(131,360)
(183,784)
Income tax recovery (expense)
3,038
(10,267)
Net loss
(128,322)
(194,051)
Net loss attributable to noncontrolling interests and
redeemable noncontrolling interest
(19,821)
(8,182)
Net loss attributable to Canopy Growth Corporation
$(108,501)
$(185,869)
Basic and diluted loss per share
$(0.30)
$(0.54)
Basic and diluted weighted average common shares outstanding
363,763,347
346,779,156
Schedule 3
CANOPY GROWTH CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars, unaudited)
Three months ended June 30,
2020
2019
Cash flows from operating activities:
Net loss
$(128,322)
$(194,051)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property, plant and equipment
17,415
13,587
Amortization of intangible assets
16,632
7,165
Share of loss on equity method investments
7,189
1,833
Share-based compensation
30,685
87,362
Asset impairment and restructuring costs
12,794
–
Income tax (recovery) expense
(3,038)
10,267
Non-cash foreign currency
8,688
2,834
Change in operating assets and liabilities, net of effects from purchases
of businesses:
Amounts receivable
17,577
13,506
Prepaid expenses and other assets
(16,059)
(24,009)
Inventory
(10,772)
(50,716)
Accounts payable and accrued liabilities
3,755
(12,582)
Other, including non-cash fair value adjustments
(75,090)
(13,486)
Net cash used in operating activities
(118,546)
(158,290)
Cash flows from investing activities:
Purchases of and deposits on property, plant and equipment
(61,547)
(211,824)
Purchases of intangible assets
(3,088)
(7,692)
Proceeds on sale of intangible assets
18,337
–
(Purchases) redemption of short-term investments
(382,486)
687,818
Investments in equity method investments
–
(2,824)
Investments in other financial assets
(2,564)
(29,414)
Investment in Acreage Arrangement
–
(395,190)
Recovery of amounts related to construction financing
10,000
–
Payment of acquisition related liabilities
(4,511)
(21,447)
Net cash outflow on acquisition of noncontrolling interests
(125)
–
Net cash outflow on acquisition of subsidiaries
–
(425,024)
Net cash used in investing activities
(425,984)
(405,597)
Cash flows from financing activities:
Payment of share issue costs
(595)
(74)
Proceeds from issuance of shares by Canopy Rivers
92
86
Proceeds from exercise of stock options
4,722
16,077
Proceeds from exercise of warrants
244,990
427
Issuance of long-term debt
4,439
–
Repayment of long-term debt
(6,345)
(98,207)
Net cash provided by (used in) financing activities
247,303
(81,691)
Effect of exchange rate changes on cash and cash equivalents
(30,079)
(18,620)
Net decrease in cash and cash equivalents
(327,306)
(664,198)
Cash and cash equivalents, beginning of period
1,303,176
2,480,830
Cash and cash equivalents, end of period
$975,870
$1,816,632
Schedule 4
Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure)
Three months ended June 30,
(in thousands of Canadian dollars, unaudited)
2020
2019
Net revenue
$110,416
$90,482
Gross margin, as reported
6,495
18,290
Adjustments to gross margin:
Charges related to the flow-through of inventory
step-up on business combinations
1,213
–
Adjusted gross margin1
$7,708
$18,290
Adjusted gross margin percentage1
7%
20%
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 June 30,
(in thousands of Canadian dollars, unaudited)
2020
2019
Net loss
$(128,322)
$(194,051)
Income tax (recovery) expense
(3,038)
10,267
Other (income) expense, net
(48,205)
(32,768)
Loss on equity method investments
7,189
1,833
Share-based compensation2
30,685
87,362
Acquisition-related costs
1,394
13,182
Depreciation and amortization2
34,047
20,752
Asset impairment and restructuring costs
12,794
–
Charges related to the flow-through of inventory
step-up on business combinations
1,213
–
Adjusted EBITDA1
$(92,243)
$(93,423)
1Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures”.
2 From Statement of Cash Flows.
Schedule 6
Free Cash Flow Reconciliation1
Three months ended June 30,
(in thousands of Canadian dollars, unaudited)
2020
2019
Net cash used in operating activities
$(118,546)
$(158,290)
Purchases of and deposits on property, plant and equipment
(61,547)
(211,824)
Free cash flow1
$(180,093)
$(370,114)
1Free cash flow is a non-GAAP measure. See “Non-GAAP Measures”.
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SOURCE Canopy Growth Corporation
The post Canopy Growth Corporation (CGC) Reports First Quarter Fiscal 2021 Financial Results appeared first on Marijuana Stocks | Cannabis Investments and News. Roots of a Budding Industry.™.
—————-
By: J. Phillip
Title: Canopy Growth Corporation (CGC) Reports First Quarter Fiscal 2021 Financial Results
Sourced From: marijuanastocks.com/cgc-reports-first-quarter-fiscal-2021-financial-results/
Published Date: Mon, 10 Aug 2020 12:46:29 +0000
Investment Advice
Are These Marijuana Stocks Built For Long Or Short Term Success?

Would You Invest In These Marijuana Stocks In 2021?
For the last several month’s investors have found a renewed interest in marijuana stocks. From mid-2020 to currently in 2021 cannabis stocks have been on the move. Many pot stocks from various niches have been rising in the market. Some marijuana stocks have not only reported record earnings but some have seen back-to-back all-time highs. With the amount of money being invested with the hopes of federal cannabis reform, people are trying to jump on board before the boat leaves the dock.
The cannabis sector as a whole has been on fire. Many companies in the cannabis industry have been preparing for what’s next to come. Meaning most cannabis companies are making operational adjustments to be able to adapt to the future of the cannabis industry. For example, 2 big-time cannabis companies both teamed up to make the biggest cannabis company on earth. Tilray Inc. and Aphria Inc. joined forces which have helped both companies market performance to a degree.
As well other companies have taken notice and may follow the same path. A lot is changing for the cannabis industry between legislation, more states going legal, and new regulations. All these variables play a factor in how this sentiment impacts the market. With more positive sentiment taking hold of the market is reflects in how well some marijuana stocks trade.
So far in 2021 cannabis stocks are moving up and seeing overall bigger gains. For this reason, many new and seasoned investors are looking to get involved and make some money. The cannabis industry is one of the fastest-growing markets in the world that is continuously expanding. The 2 cannabis stocks below are examples of when the sector is trending it resonates well with how marijuana stocks can or will trade.
Pot Stock Watch List This Month
- Green Lane Holdigns Inc. (NASDAQ:GNLN)
- Liberty Health Sciences Inc. (OTC:LHSIF)
Green Lane Holdigns Inc.
Green Lane Holdigns Inc. has been of the many marijuana stocks trying to climb higher in a volatile market. Back in 202 GNLN stock saw its price fluctuate quite often. This price fluctuation allowed for good entry points before GNLN stock had a spike in trading. Like many marijuana stocks, 2021 gave the cannabis market a nice push to start the new year. With Green Lane 2021 was no different.
In the first 2 weeks of the new year, GNLN stock shot up 25 percent in trading as it was starting to dip from this point. Even though Green Lane closed out the first month of the new year with a drop from previous highs in January the following month was a different story. Currently GNLN stock in February has been able to recover from January’s dip.
The company has been able to even reach higher highs than last month. Within the first trading week of February, GNLN stock saw gains of 27 percent. This was a much-needed momentum booster to help the company recover from its trading at the close of January. So far for in February GNLN stock has had a nice upward push in the market showing over 60 percent gains in trading. This current momentum has signaled to investors that Green Lane may be a marijuana stock to watch in 2021.
[Read More]
- 3 Top Marijuana Stocks To Watch This Year
- Will Cannabis Stocks See A Rise In Trading With Chuck Schumer Push For Federal Cannabis Legislation?
Liberty Health Sciences Inc.
Liberty Health Sciences Inc. has been an interesting cannabis stock to watch. Like many other cannabis businesses, it’s going to take more than a pandemic to stop the company from expanding. Back in January, the company announced that it will be opening a new location adding to its current portfolio of dispensaries. The Company plans to open two more dispensaries by the end of February 2021 with much more in the works.
Although in 2020 LHSIF stock traded mostly sideways with subtle spikes in trading the new year has provided a strong push in trading. Starting from December 21st LHSIF stock started to bounce and began to climb in the market. From the 21st to the 31st of December LHSIF stock shot up 90 percent. For those who held their position until this point, they made a healthy return on their investment. Pushing into the new year the company was able to sustain its market momentum and keep pushing up in the market.
In the first 14 days of trading of the new year LHSIF stock has a 13 percent increase in trading. The remainder of January’s trading resulted in a small dip. Yet overall gains for the first month of 2021 for LHSIF stock was an increase of 8 percent. This was a subtle push that helped the company sustain its current market position. Now that we have entered February LHSIF has continued to trade up in the market. Currently for the month of February LHSIF stock is up over 25 percent. If the company can continue this momentum it would intrigue more people to keep an eye on this marijuana stock.
The post Are These Marijuana Stocks Built For Long Or Short Term Success? appeared first on Marijuana Stocks | Cannabis Investments and News. Roots of a Budding Industry.™.
—————-
By: Daniel Chase
Title: Are These Marijuana Stocks Built For Long Or Short Term Success?
Sourced From: marijuanastocks.com/are-these-marijuana-stocks-built-for-long-or-short-term-success/
Published Date: Thu, 11 Feb 2021 13:30:07 +0000
Did you miss our previous article…
https://getinvestmentadvise.com/investment-advice/price-to-earnings-ratio-defined-p-e-ratio-formula/
Investment Advice
Price to Earnings Ratio Defined (P/E Ratio Formula)

Trying your hand at the stock market? Chances are, you’ve come across the term “P/E ratio”. If you’re like many who are new to the stock market, you’ve looked at this phrase and asked yourself, “What in the world is that?”
P/E ratio, otherwise known as the price-to-earnings ratio, is a formula that investors use to determine the value of a company’s share. It is one of the most common formulas used to determine the value of a stock. The formula compares the price of a company’s share to the earnings per share (EPS) of the company in order to determine how much an investor is paying for $1 of the company’s earnings. Let’s take a deeper dive into the P/E formula. Use the links below to jump ahead to a section of your choosing.
P/E Formula and Calculation
First thing’s first: let’s learn the price to earnings ratio formula and how to calculate it. The price-to-earnings ratio formula is as follows: the price of a single share of a company’s stock (What is a stock?), divided by the company’s earnings per share (EPS). The ratio of these two variables will tell you exactly how much an investor is spending for a single dollar of the company’s earnings.
Finding the cost of a company’s stock is extremely simple. In order to find the price of a single share of a company’s stock, all you need to do is enter the company’s stock ticker symbol (the series of characters that represents that company on the stock market) into a finance website, such as investor.gov. You’ll quickly find the current cost for a single share of that company’s stock. Google also keeps an up-to-date Market Summary for the prior day’s stock market, so a quick Google search will often bring exactly the answer you’re looking for.
Determining a company’s earnings per share (EPS) can be a bit trickier. Earnings per share are broken down into 2 categories: trailing earnings and forward earnings. Trailing earnings, often shortened to TTM, are the company’s core earnings over the trailing, or prior, 12 months. This number is the profit that the company has generated over the past 12 months of business. Remember that we’re talking about the net income of a business, rather than the gross income (Need a refresher? Learn more about gross income vs net income.). P/E ratios calculated with trailing earnings are known as the trailing P/E (P/E TTM). Forward earnings, on the other hand, are the predicted earnings that the company will generate over the next 12 months. P/E ratios calculated using forward earnings are known as the forward P/E. Both types of earnings are divided by the total number of public shares on the market in order to generate their EPS. More on this later.
Let’s try out an example. Say you’re looking to determine the trailing P/E of a fictional company AlphaBet Corporation, known on the stock market as ABC. Their share price is currently at $50 per share. Their trailing earnings per share is $5. Divide the $50 per share by the $5 EPS, and you’re left with a P/E of 10. This means that investors are paying $10 for every $1 in earnings per share.
Understanding P/E Ratio
So, ABC has a P/E of 10. What does that mean for you?
In the most general sense, the lower a P/E ratio, the less an investor is paying for each dollar of a company’s earnings per share. A higher P/E ratio means that an investor is paying more per EPS. But, unfortunately, determining which stock to buy isn’t as simple as “look for the lowest P/E ratio”.
It is imperative to remember that everything on the stock market is relative. “Good” and “bad” numbers are different for each and every industry. An electronics company and an automotive company are functioning in two vastly different landscapes. Therefore, in order to determine what is a good price to earnings ratio, you’ll need to understand the landscape of P/E ratios in the industry. Look at similar companies’ P/E ratios to better understand the relative value of your company’s P/E ratio. If ABC’s price-to-earnings ratio seems extremely high as compared to other companies in the industry, it may be an overvalued stock. On the other hand, if it seems extremely low as compared to other companies in the industry, it may be a very valuable stock.
Let’s try another example. We’ve already determined that ABC’s price is $50 per share, earnings are $5 per share, and P/E is 10. A competitor, DOG, also has stock for $50 per share. Their earnings, on the other hand, are $2 per share, making their PE 25 (50/2=25). An investor would pay $10 for every $1 of ABC’s earnings per share, but they’d have to pay $25 for every $1 of DOG’s earnings per share. With a better understanding of the landscape, we can see how ABC sits relative to its competitors.
A company’s price to earnings ratio may also be looked at relative to itself. Remember those two types of earnings we reviewed earlier? We can compare a company’s trailing P/E to their forward P/E to better understand the value of a stock. A company with a high trailing P/E ratio may have been rather unprofitable the prior 12 months because theywere preparing to ramp up business substantially, and took on a number of upfront costs. They may be expecting a boom of profits over the forward 12 months, leaving them with a substantially lower forward P/E. By reviewing these numbers in comparison to each other, we may see an opportunity for a long-term investment.
Limitations of the P/E Ratio
While the price to earnings ratio is certainly one of the most widely used calculations among stock market investors and analysts, it’s not a cut and dry way to determine a good or bad stock. It gives investors a good understanding of the value of stock in a particular moment, but it certainly has its short-comings.
Just as the stock market is relative, it’s also in a constant state of fluctuation. It is re-evaluated and recalculated constantly. Why does this matter when it comes to the price to earnings ratio? Well, just look at the variables we use to determine the P/E ratio.
First, we have the “price” of the price-to-earnings ratio: the cost of a single share of a company’s stock. Stock prices fluctuate every single day based on supply, demand, current events, and more. Typically, the cost of a company’s stock will be reported as the cost that it was when the stock market closed the prior day. Each time a company’s stock price changes, their P/E ratio will change. Certain companies may tend to have a greater fundamental volatility than others, leaving their stock price changing substantially each and every day. Even those with low fundamental volatility experience routine fluctuation.
Next, we have the “earnings” in the price-to-earnings ratio. Both trailing and forward P/E ratios have their limitations. Trailing P/E can feel like the more reliable of the two numbers because it’s based on facts. We take their actual earnings over the prior 12 months into account. But, in many situations, a company’s prior 12 months may have little to do with their next 12 months. As mentioned earlier, a company may have spent heavy the prior 12 months in preparation to ramp up the next 12 months. The trailing P/E won’t show us any of that. The forward P/E, on the other hand, is based on predictions. And predictions are quite educated guesses, but at the end of the day predictions are still guesses. A company may fall short of their predicted earnings or blow completely past them.
Looking to try your hand at the stock market? Don’t go at it alone. Consider opening an investment account with Mint. We believe that there’s no “one-size-fits-all” approach to investment. That’s why we offer a variety of investment partners, suited to each particular need. Let’s find the best to suit yours.
The post Price to Earnings Ratio Defined (P/E Ratio Formula) appeared first on MintLife Blog.
—————-
By: Mint
Title: Price to Earnings Ratio Defined (P/E Ratio Formula)
Sourced From: mint.intuit.com/blog/investing/price-earnings-ratio/
Published Date: Tue, 25 Aug 2020 19:37:02 +0000
Did you miss our previous article…
https://getinvestmentadvise.com/investment-advice/will-marijuana-banking-be-apart-of-federal-cannabis-reform/
Investment Advice
Will Marijuana Banking Be Apart Of Federal Cannabis Reform?

The Cannabis Industry VS Financial Institutions
As marijuana stocks and the cannabis industry as a whole awaits federal cannabis reform the sector keeps trending. Now if the U.S. can federally decriminalize cannabis some analysts feel it may cause some cannabis stocks to rally. As well as many new doors will that can open. For one many new markets will look to join the U.S. cannabis industry. Furthermore, with federal cannabis reform, it could be the start of initiating a banking system for the industry.
Currently due to cannabis still being federally illegal banks can not take money from a cannabis-related business. From the time states started going legal, it has been an issue that has yet to be resolved. The cannabis industry is one of the fastest-growing industries in the world, especially in the United States. Politicians have been working to pass various pieces of cannabis legislation.
The one bill that would be beneficial to the industry is known as the SAFE Banking Act. This bill would allow banks to accept money from cannabis-related businesses. On March 7, 2019, the bill was introduced to the U.S. House of Representatives by Ed Perlmutter and was introduced to the Judiciary and Financial Services Committees. Back in 2019, the Financial Services Committee voted 45 to 15 to advance the bill to the full House.
The SAFE Banking Act provisions were included in the HEROES Act COVID-19 relief bill passed in the U.S. House in May 2020. They were again included in a bill approved by the house 214–207 in October. A push to include the SAFE Banking Act provisions in the end-of-year COVID-19 stimulus failed, though hope remained it could pass in 2021 if reintroduced.
How Will The Cannabis Industry Work With Banks
When it comes to any business you can think having startup capital is important. Now not every person with money is willing to invest in a new venture which makes finding that more of a task. Especially with cannabis-related business and right now banks are no help. For a business to acquire a line of credit or some type of lending your business must be able to have some type of financial record.
This usually tells banks and lenders how good you are at paying things back and how reliable you are to do so. The bigger obstacle for cannabis businesses is how do you show you are trustworthy with no credit history. Once again this due to financial institutions not working with cannabis businesses. Let’s look at a few steps to help jump over some red tape.
First, you should start a new business that is a separate company from your personal credit. This will help when it comes time to do your taxes. The second step to take is you need to register for your EIN number. Next thing to do is open a new bank account and make sure you can show that you have continuous income which shows financial stability. Again with banks not accepting cannabis money the last step may be next to impossible to do.
[Read More]
- Are You Up To Date On The Cannabis Industry In 2021?
- Are These The Best Marijuana Stocks To Buy For Long Term Cannabis Investments?
Will Cannabis Banking Actually Happen?
The way financial institutions offer other industries various banking options is not the same for the cannabis industry. Although there is some grey area with cannabis and banks yet most banks won’t offer services for how high risk the industry is. This leaves many cannabis businesses left out from what other traditional retail businesses would have. Look past the risk banks also look at taking cannabis money as to much work. This would result in following regulations and keeping data on all money. This process has been established by the Bank Secrecy Act of 1970. Also, working with the large amounts of cash cannabis businesses generate may affect how a bank can operate.
With this roadblock between banks and cannabis money, it shuns cannabis businesses from establishing a form of credit. This issue alone is why the industry operates only in cash with very few places to keep it. Also, this issue can do much harm to future relationships with other companies and businesses. If a cannabis business can not establish a credit history no lender or bank can help. That’s why it’s important to have an industry as big as cannabis have some form of credit being reported to credit companies. This will tell other lenders and banks that a particular business is profitable enough to pay back any loans.
What Will The Future Of Cannabis Banking Become
It’s wild to think that an industry that is generating a high volume of cash is being blocked from showing the reliability needed to secure lending. Some feel if the cannabis business can earn the trust of financial institutions by being transparent with its earnings. This may be a step to banks feeling more comfortable with working with a cash-intensive business. Hopefully, with federal cannabis reform, it will help push cannabis banking in the direction needed to help out the industry.
The post Will Marijuana Banking Be Apart Of Federal Cannabis Reform? appeared first on Marijuana Stocks | Cannabis Investments and News. Roots of a Budding Industry.™.
—————-
By: J. Phillip
Title: Will Marijuana Banking Be Apart Of Federal Cannabis Reform?
Sourced From: marijuanastocks.com/will-marijuana-banking-be-apart-of-federal-cannabis-reform/
Published Date: Tue, 09 Feb 2021 18:34:56 +0000
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