- The Company secured a strategic $5
billion investment from Fortune 500 beverage leader
Constellation Brands
- Since October 1, Company SKUs
obtained over 30% listings market share1 in multi-store
physical retail store networks nationwide, strategic phase 2
rollout of value added products including edible Softgels and
pre-rolled joints expected to increase market share
- Acquisition of Canopy Health Innovations and announced plan
to acquire ebbu Inc. reinforces the Company's commitment to owned
IP; Company completed or acquired over 120 patent filings across
hardware, product formulation, genetics, production innovation, and
medical treatments
- Company completed first of a kind US Drug Enforcement Agency
permitted import into the United
States of Canopy Softgel products for research
purposes
- Registered medical patients increased by 34% year-over-year
to an industry leading 84,400 patients, while second quarter
revenue came in as planned with staging for the third quarter
launch of the recreational market in Canada
- The Company is very well positioned with the inventories,
supply chain logistics and automation in place, and capacity coming
on-line to support market demand
SMITHS FALLS, ON, Nov. 14, 2018 /CNW/ - Canopy Growth Corporation
(TSX: WEED) (NYSE: CGC) ("Canopy Growth" or "the Company") today
released its consolidated financial results for the second quarter
fiscal 2019 ended September 30,
2018. All financial information in this press release is
reported in Canadian dollars, unless otherwise indicated.
During the quarter, Canopy Growth secured capital via a
strategic $5 billion investment from
Fortune 500 beverage leader Constellation Brands, which closed
subsequent to the quarter. These funds will be deployed towards the
Company's core strategic objectives of (i) intellectual property
development, and (ii) replicating the Company's Canadian platform
for success across a large number of international
markets. These objectives will be achieved through
international acquisitions as well as continued internal
investments across the globe, and are discussed in further detail
below.
Second Quarter
Fiscal 2019 Operational and Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
Q2 2019
|
Q2 2018
|
|
% Change
|
Active registered
patients
|
|
84,400
|
63,000
|
|
34%
|
Kilograms and
kilogram equivalents sold
|
|
2,197
|
2,020
|
|
9%
|
Kilograms
harvested
|
|
15,127
|
4,167
|
|
265%
|
Inventory &
Biological Assets (millions)
|
|
$171
|
$97
|
|
76%
|
|
|
|
|
|
|
|
Revenues
(millions)
|
|
$23.3
|
$17.6
|
|
33%
|
Average selling price
per gram
|
|
$9.87
|
$7.99
|
|
24%
|
Cash and Cash
Equivalents (millions)
|
|
$429
|
$108
|
|
296%
|
Second Quarter Fiscal 2019 Revenue
Highlights
Sales in the second quarter were in line with management's
expectations leading into the opening of the recreational cannabis
market. Revenue for the second quarter fiscal 2019 was $23.3 million, representing an increase of 33%
over the prior year's quarter in which revenue was $17.6 million. As planned, the Company made
only limited "test" shipments of $0.7
million into recreational channels during the second quarter
to confirm supply chain systems functionality before the launch of
recreational cannabis on October 17.
Oils, including the Company's Softgel capsules, accounted for
34% and 18%, in the respective second quarters of fiscal 2019 and
2018, of the product revenue for each period, demonstrating an
increased demand for value-added products that require lower active
ingredient inputs and provide higher margins.
Second Quarter Fiscal 2019 Product Sales
Highlights
During the second quarter of fiscal 2019 ended September 30, 2018, the Company sold 2,197
kilograms and kilogram equivalents at an average sale price of
$9.87, up from 2,020 kilograms and
kilogram equivalents at an average price of $7.99 in the prior year period, representing an
increase of 9% and 24% respectively. The higher average price
was due to changes in the mix of product sold, principally a higher
percentage of Softgel sales and sales to Germany.
Year-to-date, the Company has sold 4,892 kilograms and kilogram
equivalents at an average sale price of $9.36, up from 3,850 kilograms and kilogram
equivalents at an average price of $7.98 in the prior year period, representing an
increase of 27% and 17% respectively.
Canadian Regulated Adult Use Market – Cannabis
Sales
As has been previously disclosed, the Company ended the second
quarter with supply commitments to provinces and territories of
70,000 kg, not including Ontario.
The Company remains on track to meet all commitments on an
annualized basis, and is working closely with all provincial and
territorial partners to address supply shortages faced across the
country, including improvements to the Company's own SKU offering
and overall availability for all partners. To this end, as compared
to the October 17-31 period, the
average number of kilograms shipped on a daily basis to provincial
and territorial partners during the period November 1-12 has more than doubled.
Having built up sufficient inventory, the Company has also now
begun shipping value-add products including its Softgels capsules
to certain provinces with more to follow in the coming weeks,
expanding its offering as initial competitor offerings begin to
decline in the market. The Softgels will be followed shortly by
pre-rolled joints produced on patent pending equipment designed and
created by the Canopy Engineering Team to meet global standards and
throughput with no third party royalties or dependencies.
Canadian Regulated Adult Use Market – Retail
Footprint
Canopy Growth finalized its acquisition of HIKU during the
second quarter, adding the Tokyo Smoke retail network on top of its
Tweed stores. Offering distinct consumer experiences will allow the
Company to appeal to various consumer demographics without
saturating any single market. Tokyo Smoke operates three retail
cannabis stores today in Winnipeg
and plans to add 12 additional stores in provinces that support
private retail by September 2019.
Tweed retail now has 8 locations selling cannabis today across
Newfoundland and Manitoba and an e-commerce presence in
Manitoba and Nunavut. By September
2019, Tweed plans to add 20 additional brick and mortar
shops in provinces with private retail models. Yet to be defined
provincial models may provide opportunities for further
expansion.
Management Commentary
"With extensive investments over the past year, including most
notably in the second quarter, in branding and retail development,
our entrance into the retail cannabis market has been a success
with our SKU assortment obtaining over 30% listings market share in
multi-store physical retail store networks nationwide. With
substantial product inventories on hand, new product formats coming
to market as planned, a captive sales force driving increased
demand through physical retail stores and increasing internal and
channel efficiencies, we believe based on market conditions today
that we will attain significant and sustainable market share of the
Canadian recreational market," Bruce
Linton, Chairman & Co-CEO, Canopy Growth.
"With business opportunities expanding globally, we continue to
make significant investments in building our international team and
footprint including through multiple acquisitions in Latin America completed during the quarter.
The completion of, to our knowledge, a world first Canadian export
of a US federally legal DEA permitted product, and the announced
acquisition of US federally legal hemp R&D specialists, ebbu,
are critical stepping stones for our broader entrance into the US
market when it is federally-permissible to do so," concluded
Linton.
"With global management infrastructure in place, the Company is
building an international platform in order to drive medical market
growth, which will in turn drive innovation applicable to
recreational cannabis markets. This approach requires large-scale
production capacity, value-add processing, diversified intellectual
property, and clinical research – all things we have prioritized
and invested heavily into this past quarter."
Update on Canadian Capacity Expansion and Facilities
Milestones
During the quarter and subsequently, the Company has continued
to advance its stated objective of 5.6 million square feet of
production across Canada,
receiving licenses for almost 2.0 million square feet of production
space. With over 4.3 million sq. ft. of licenced capacity, the
Company continues to see new growing areas brought online as
facilities are loaded up incrementally. As each facility comes
online, the Company continues to mark major milestones, including
the transfer of over 10,700 kilograms from the BC Tweed facilities
in a single transfer during the quarter.
Through use of advanced inspection technologies, proprietary
modifications, and further development of in-house expertise, the
Company has increased total Softgel production capacity to several
million per week. This represents a 10 fold increase over the
same period last year. Construction of advanced manufacturing
facilities built to GMP standards as well as distribution
infrastructure continues a the 1 Hershey Drive Smiths Falls
campus.
Commissioning of patent-pending automated pre-roll production
lines; large scale dried bud and oil pre-pack systems; and
automated fulfillment and shipping systems have also significantly
increased operating efficiencies in order to build inventory and
deliver on commitments nationwide.
Update on Core Pillar of Intellectual Property
Development
During the second quarter Canopy Health Innovations ("CHI")
received approval from Health Canada to proceed with Phase IIb
"in-human" clinical trials to evaluate the use of medical cannabis
in the treatment of insomnia. The trial will be conducted in
collaboration with a leading Canadian research institution. Canopy
Animal Health also received approval from the Veterinary Drug
Directorate of Health Canada to research the effectiveness of
cannabidiol in the treatment of anxiety in certain animals.
The Company acquired CHI during the quarter to reinforce the
importance of owned IP and integrate the team's significant
expertise into the Company's broader medical platform. With the
planned acquisition of ebbu, Canopy Growth will have over 120
patent filings and will continue to build its IP portfolio across
hardware, product formulation, genetics, production innovation, and
medical treatments.
Update on Core Pillar of International Market
Expansion
Since the acquisition of MedCann Gmbh in November 2016, Canopy Growth has been an early
mover into international markets by acting as a trusted partner and
advisor to regulators, while building local partnerships for scaled
production and distribution capabilities around the world. Canopy
Growth's global management structure has transitioned from
strategizing and into execution, with multi-functional teams on the
ground across the globe. The following updates represent
operational highlights from the second quarter and subsequent
events.
North America and
Carribean
- The Company has completed its first shipment into the United
states under US Drug Enforcement Agency approval.
- The announced acquisiton of IP and assets from Colorado-based hemp researcher, ebbu Inc.
- Jointly-owned Tweed JA has received a 30,000-plant cultivation
licence from Jamaican authorities and can immediately commence
producing cannabis for medical purposes.
- Canopy has entered into a distribution agreement in a second
Caribbean jurisdiction with a
local health product distributor who has ordered a variety of
Spectrum Cannabis Softgel and oil products.
Latin America
- Company expanded its focus on emerging cannabis market in
Latin America with the formation
of its wholly-owned affiliate Canopy LATAM Corporation, the
acquisition of Spectrum Cannabis Colombia, which previously
operated as Colombian Cannabis S.A.S, and the acquisition of
unowned shares in Spectrum Cannabis Chile SpA.
- Ongoing activities represent meaningful steps towards future
value-added production to supply the region, home to more than 600
million inhabitants. Operations at our fully owned 126 hectare farm
in Colombia are continuing under
the leadership of Spectrum Cannabis Colombia S.A.S. ("Spectrum
Cannabis Colombia") and initial cultivation has begun in the fully
licensed 42 hectare (4.5 million sq. ft.) section of the farm.
- The Company has imported product into Latin America and launched certain clinical
trials.
Australia
- Since establishing Spectrum Australia and entering a research
partnership with the State of
Victoria, the Canopy team in Australia has acquired a site with
approximately 100,000 sq. ft. of production capacity. While the new
site is retrofitted and licensed, additional genetics have been
successfully imported into Australia and will be held with the research
partner to ensure a full line of Spectrum products can be launched
simultaneously to the Australian market.
Europe
- In Europe the Company
continues to pursue its dual approach of producing and distributing
medical cannabis in jurisdictions with established federal
frameworks. Core assets continue to progress to ensure the supply
chain is in place to deliver to expanding and emerging markets
throughout 2019, including owned and partner facilities in
Denmark, Germany and Spain.
Second Quarter Fiscal 2019 Gross Margin
Summary
Note, the Company now includes depreciation related to plant
operations in its reported gross margin. Comparative figures have
been restated as described in Note 3 to the Company's condensed
interim consolidated financial statements, which will be filed on
SEDAR after markets on November 14,
2018.
The cost of sales includes the impact of operating costs of
subsidiaries not yet cultivating or selling cannabis, including our
BC Tweed and Vert Mirabel facilities that were only partially
licensed, and higher overheads incurred while preparing operations
for the legalization of recreational cannabis, and the diversion of
growing space in Smiths Falls to
creating clones for transfer to the Company's other growing
facilities. Excluding the costs associated with non-cultivating
subsidiaries totaling $7.0 million,
the gross margin2 before the fair value impacts in cost
of sales and other inventory charges would have been $13.6 million or 58% of sales.
During the quarter, the reported fair value changes in
biological assets and other inventory charges combined to an
expense of $40.6 million and included
adjustments to net realizable value of inventory targeted to the
recreational market, reflecting whole-sale pricing, and to a
netwrite-off of approximately $16
million related to plants culled in the quarter due to
timing issues with respect to having infrastructure ready for
licensing and receiving harvested plants. Since then, the
required infrastructure has been completed and licensing since
received.
Second Quarter Fiscal 2019 Operating Expense
Summary
Management believes foundational investment in building the
Company's significant and diversified production platform, flexible
distribution capability, world-leading brands, retail capabilities,
medical and recreational sales and customer support capabilities,
robust information technology infrastructure, international
business development and operations and as well as research and
development into advanced operational systems, cannabis genetics in
different environmental conditions and new cannabis-based product
form factors that will enter the market when permitted, all of
which directly impacted profitability in the quarter, represents a
prudent long term investment to strengthen the Company's global
leadership position. As a result, both sales and marketing and
general and administrative expenses were up significantly relative
to the same period last year.
|
|
|
|
|
|
|
Q2
2019
|
Q2
2018
|
Year-to-date
2019
|
Year-to-date
2018
|
|
|
$
|
% of
Revenue
|
$
|
% of
Revenue
|
$
|
% of
Revenue
|
$
|
% of
Revenue
|
|
Sales and Marketing
Expenses
|
$39.0
|
167%
|
$7.6
|
43%
|
$56.3
|
114%
|
$14.0
|
42%
|
|
General and
Administrative Expenses
|
$37.1
|
159%
|
$8.4
|
48%
|
$56.7
|
115%
|
$15.9
|
48%
|
|
Research and
Development Expenses
|
$1.9
|
8%
|
$0.5
|
3%
|
$2.7
|
5%
|
$0.6
|
2%
|
|
|
|
Sales and marketing expenses include costs associated with the
development of branding, marketing and education campaigns, the
development of new permitted product SKUs, the development of
recreational product packaging, the development of cannabis retail
and education programs as well as costs associated with the
Company's medical outreach program.
These expenditures represent the Company's view that strong
brand recognition is, over time, essential to the Company's
successful market share acquisition strategy, particularly in the
new recreational market in Canada.
These costs represent a strategic up front investment, which
management believes will have a long-term benefit in customer
acquisition and retention. Further, the Company made these
investments to aggressively seek new domestic and international
business opportunities to build for the future.
As a result, sales and marketing were up significantly relative
to the same periods last year for the purpose of being ready for
the "future state" recreation market while at the same time
developing international markets. Management expects that marketing
costs will be curtailed as the Cannabis Act took effect on
October 17, 2018, and will focus on
age-gated branding awareness in compliance with the new
rules.
Specifically, sales and marketing expenses for the three months
ended September 30, 2018 were
$39.0 million or 167% of
revenue. During this period, the Company launched its
national "Hi" media campaign, which included digital placements
across Canada, brand activations
in communities from coast-to-coast and content creation,
including for the Tweed.com website and marketing automation
platforms, and developing competencies in retail. In respect of
government regulations, all non-age gated properties were removed
on October 16, 2018. The Company
is continuing to invest in age-gated channels, for both media and
experiential marketing, across all brands in adherence to C-45
guidelines on promotion.
In comparison, sales and marketing expenses for the three months
ended September 30, 2017 were $7.6
million or 43% of revenue.
Sales and marketing expenses for the six months ended
September 30, 2018 and 2017 were
$56.3 million or 114% of revenue and
$14.0 million or 42% of revenue,
respectively.
General and Administrative ("G&A") expenses include higher
legal and professional services fees related to investments in
governance, expanded operations in Canada and internationally and supporting
business development. G&A expenses also included expenses
related to expanding the Company's information technology
capability, including a new ERP system, higher program spending
across the Company's expanding global operations and activities. In
addition, G&A expenses include the necessary use of consultants
and advisory services while expanding and commercializing the
Company's operations, higher compliance costs associated with
regulatory requirements in countries in which the Company is
establishing operations and compliance expenses related to the
Company's listings on the Toronto Stock Exchange and New York Stock
Exchange including related professional and transfer agent
fees.
G&A expenses for the three months ended September 30, 2018 and 2017 were $37.1 million or 159% of revenue and $8.4 million or 48% of sales,
respectively. Of note, the second quarter fiscal 2019 G&A
included a provision on an office lease in Montreal no longer occupied amounting to
$4.2 milllion.
G&A expenses for the six months ended September 30, 2018 and 2017 were $56.7 million and $15.9
million, or 115% and 48% of revenue, respectively.
Acquisition-related expenses for the three-month period ended
September 30, 2018 and 2017 were
$3.2 million and $0.9 million, respectively. Acquisition-related
expenses in the second quarter period ended September 30, 2018 were primarily related to the
Hiku, BC Tweed and CHI acquisitions. In addition, costs were
incurred due to the ongoing evaluation of potential acquisitions
performed during the period and increased legal, accounting and
strategic business consulting services required to complete or
evaluate the transactions. The Company is likely to acquire
additional strategic assets in the future as it pursues its
business strategy.
Acquisition-related expenses for the six-month period ended
September 30, 2018 and 2017 were
$5.1 million and $1.7 million, respectively.
During the three month period ended September 30, 2018, the price of shares of Canopy
Growth increased approximately 63%, to $62.75. The resulting non-cash share-based
compensation expense related to options granted to employees and
consultants of the Company and to acquisition-related milestones
combined for the three-month period ended September 30, 2018 totaled $99.6 million. In practice, all employees of the
Company receive stock options as part of their compensation
package. Acquisition-related milestone payments based on future
performance and related criteria have been treated as stock
compensation expense instead of being allocated to the purchase
price, and amounted to $50.7 milllion
of the total combined stock compensation. In comparison, the
non-cash, share-based compensation expense related to options
granted to employees and consultants of the Company and to
acquisition-related milestones combined for the three-month period
ended September 30, 2017 totaled
$7.3 million.
Second Quarter Fiscal 2019 Adjusted EBITDA
Summary (Non-GAAP measure)3
Adjusted EBITDA in the second quarter fiscal 2019 amounted to a
loss of $57.7 million compared to a
loss of $4.8 million in the same
period last year.
Year-to-date, Adjusted EBITDA amounted to a loss of $80.2 million compared to a loss of $8.7 million in the same period last year.
The Adjusted EBITDA is reconciled and explained in the
Management's Discussion & Analysis under "Adjusted EBITDA
(Non-GAAP Measure)" a copy of which will be filed on SEDAR and
EDGAR after financial markets close today. The Adjusted EBITDA is
reconciled in a table elsewhere in this press
release.
Second Quarter Fiscal Year 2019 Other
Expenses and Net Earnings Summary
Other expenses of $115.7 million
are primarily made up of fair value changes on financial assets and
financial liabilities, the majority of which is non-cash. The
amount was primarily made up of changes in the fair value of the
senior convertible notes due to marking to market which saw the
trading price of the convertible notes increase from
$101.875 to $149 per unit from the end of the first quarter
to the end of the second quarter and amounted to an expense of
$223.4 million. This loss was partly
offset by a gain amounting to $62.7
million related to the acquisition of Canopy Health
Innovations, and gains totaling $48.2
million driven mostly by fair value changes on the
TerrAscend warrants of $44.7
million.
The $115.7 million in other
expenses described above, accounted for $0.52 of the reported $1.52 loss per basic and diluted share in the
quarter, compared to net loss of $0.01 per basic and diluted share in the
comparative period last year.
The after-tax net loss in the quarter, inclusive of non-cash
share-compensation expenses, fair value impacts and other non-cash
expenses as described above amounted to a loss of $330.6 million or $1.52 per basic share compared to a net loss of
$1.6 million or $0.01 per basic and diluted share in the
comparative period last year.
Year-to-date, the after-tax net loss, inclusive of non-cash
share-compensation expenses, fair value impacts and other expenses
as described above, amounted to a loss of $421.6 million or $1.98 per basic share compared to a net loss of
$10.8 million or $0.07 per basic share in the comparative period
last year.
Second Quarter Fiscal 2019 Balance Sheet
Highlights
At September 30, 2018, the
Company's cash and cash equivalents totaled $429.4 million, representing an increase of
$106.8 million from March 31, 2018, principally due to the issuance
of $600 million in convertible notes
in the first quarter, offset by investment in the expansion of our
production assets, strengthening corporate capabilities,
brand-related campaigns and the establishment of physical retail
stores in Newfoundland &
Labrador, Manitoba and
Saskatchewan.
Inventory at September 30, 2018
amounted to $150.4 million
(March 31, 2018 - $101.6 million) and biological assets amounted to
$20.7 million (March 31, 2018 - $16.3
million), together totaling $171.1
million (March 31, 2018 -
$117.9 million). Inventories are
continuing to be scaled to meet management's expectation of market
demands, including the legalized recreational market and meeting
medical customer commitments.
At September 30, 2018, the Company
held inventory of 31,214 kilograms of dry cannabis, 21,499 litres
of cannabis oils, ranging from concentrated resins, or refined oil,
to finished oil, and 1,497 kilograms of Softgel capsules.
The Company remains confident that current inventory levels and
the planned production ramp, including approximately 2.0 million
square feet of licensed production space since August 2018, are sufficient to meet annual supply
commitments to provinces and territories.
The unaudited Consolidated Financial Statements and Management's
Discussion and Analysis documents for the three and six months
ended September 30, 2018 will be
filed on SEDAR after financial markets close today, November 14, 2018, and will be available at
www.sedar.com. The basis of financial reporting in the Unaudited
Condensed Interim Consolidated Financial Statements and
Management's Discussion and Analysis documents is in thousands of
Canadian dollars, unless otherwise indicated.
Note 1: Average of estimated percentage of available SKU
counts in provinces and territories with multiple physical retail
stores supplied under established supply contracts.
Note 2: The Gross margin before the fair value effects of
the IFRS accounting for biological assets and inventory is a key
operational metric that does not have any standardized meaning
prescribed by IFRS and may not be comparable to similar measures
presented by other companies. The definition of this term can
be found in the Management's Discussion & Analysis under GROSS
MARGIN, a copy of which will be filed on SEDAR after financial
markets close today.
Note 3: The Adjusted EBITDA is a non-GAAP financial
measure that does not have any standardized meaning prescribed by
IFRS and may not be comparable to similar measures presented by
other companies. The Adjusted EBITDA is reconciled and explained in
the Management's Discussion & Analysis under "Adjusted EBITDA
(Non-GAAP Measure)", a copy of which will filed on SEDAR after
financial markets close today.
Webcast and Conference Call Information
The Company will host a conference call and audio webcast with
Bruce Linton, Chairman & Co-CEO
and Tim Saunders, CFO at
8:30 AM Eastern Time on November 14, 2018.
Webcast Information
A live audio webcast will be available at:
https://event.on24.com/wcc/r/1861049/FFEFED61C13E0E47609599A4EBD15422
Calling Information
Toll Free Dial-In Number: 1-888-231-8191
International Dial-In Number: (647) 427-7450
Conference ID: 4578825
Replay Information
A replay of the call will be accessible by telephone until
11:59 PM ET on February 12, 2019.
Toll Free Dial-in Number: 1-855-859-2056
Replay Password: 4578825
About Canopy Growth Corporation
Canopy Growth is a
world-leading diversified cannabis and hemp company, offering
distinct brands and curated cannabis varieties in dried, oil and
Softgel capsule forms. 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.
Canopy Growth has established partnerships with leading sector
names including cannabis icon Snoop Dogg, breeding legends DNA
Genetics and Green House seeds, and Fortune 500 alcohol leader
Constellation Brands, to name but a few. Canopy Growth operates ten
cannabis production sites with over 4.3 million square feet of
production capacity, including over 500,000 square feet of
GMP-certified production space. The Company has operations in nine
countries across five continents. The Company is proudly dedicated
to educating healthcare practitioners, conducting robust clinical
research, and furthering the public's understanding of cannabis,
and through its partly owned subsidiary, Canopy Health Innovations,
has devoted millions of dollars toward cutting edge,
commercializable research and IP development. Through partly owned
subsidiary Canopy Rivers Corporation, the Company is providing
resources and investment to new market entrants and building a
portfolio of stable investments in the sector. From our historic
public listing to our continued international expansion, pride in
advancing shareholder value through leadership is engrained in all
we do at Canopy Growth. For more information visit
www.canopygrowth.com.
Notice Regarding Forward Looking Statements
This news
release contains forward-looking information. Often, but not
always, forward-looking information can be identified by the use of
words such as "plans", "expects" or "does not expect", "is
expected", "estimates", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
Forward-looking information involves known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Canopy Growth or its subsidiaries to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking
information contained in this news release. Examples of such
statements include statements with respect to the future market
share achieved in recreational markets, product development,
clinical trial work, and planned acquisition activities related to
BC Tweed, and Canopy Health Innovations. Risks, uncertainties
and other factors involved with forward-looking information could
cause actual events, results, performance, prospects and
opportunities to differ materially from those expressed or implied
by such forward-looking information, including risks associated
with entering a new market dynamic in Canada or internationally, and such risks
contained in the Company's annual information form dated June
28, 2017 and filed with Canadian securities regulators
available on the Company's issuer profile on SEDAR
at www.sedar.com. Although the Company believes that the
assumptions and factors used in preparing the forward-looking
information in this news release are reasonable, undue reliance
should not be placed on such information and no assurance can be
given that such events will occur in the disclosed time frames or
at all. The forward-looking information included in this news
release are made as of the date of this news release and the
Company does not undertake an obligation to publicly update such
forward-looking information to reflect new information, subsequent
events or otherwise unless required by applicable securities
legislation.
CANOPY GROWTH
CORPORATION
|
CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
UNAUDITED
|
September
30,
|
March 31,
|
(Expressed in CDN
$000's)
|
2018
|
2018
|
|
|
|
|
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
429,401
|
$
|
322,560
|
Amounts
receivable
|
|
45,807
|
|
21,425
|
Biological
assets
|
|
20,720
|
|
16,348
|
Inventory
|
|
150,406
|
|
101,607
|
Prepaid expenses and
other assets
|
|
56,533
|
|
19,837
|
|
|
702,867
|
|
481,777
|
|
|
|
|
|
Property, plant and
equipment
|
|
661,402
|
|
303,682
|
Other long-term
assets
|
|
26,776
|
|
8,340
|
Investments in
associates and joint ventures
|
|
136,003
|
|
63,106
|
Other financial
assets
|
|
231,387
|
|
163,463
|
Intangible
assets
|
|
103,867
|
|
101,526
|
Goodwill
|
|
1,114,158
|
|
314,923
|
|
|
|
|
|
|
$
|
2,976,460
|
$
|
1,436,817
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
159,633
|
$
|
89,571
|
Deferred
revenue
|
|
206
|
|
900
|
Current portion of
long-term debt
|
|
903,453
|
|
1,557
|
Other current
liabilities
|
|
27,000
|
|
-
|
|
|
1,090,292
|
|
92,028
|
|
|
|
|
|
Long-term
debt
|
|
6,707
|
|
6,865
|
Deferred tax
liability
|
|
30,889
|
|
33,536
|
Long-term financial
liabilities
|
|
7,750
|
|
61,150
|
|
|
|
|
|
|
|
1,135,638
|
|
193,579
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
Share
capital
|
|
2,097,728
|
|
1,076,838
|
Other
reserves
|
|
77,905
|
|
127,418
|
Accumulated other
comprehensive income
|
|
(34,742)
|
|
46,166
|
Deficit
|
|
(509,062)
|
|
(91,649)
|
|
|
|
|
|
Equity attributable
to Canopy Growth Corporation
|
|
1,631,829
|
|
1,158,773
|
|
|
|
|
|
Non-controlling
interests
|
|
208,993
|
|
84,465
|
|
|
|
|
|
Total
equity
|
|
1,840,822
|
|
1,243,238
|
|
|
|
|
|
|
$
|
2,976,460
|
$
|
1,436,817
|
CANOPY GROWTH
CORPORATION
|
CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF OPERATIONS
|
FOR THE THREE AND
SIX MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
|
UNAUDITED
|
Three months
ended
|
Six months
ended
|
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
(Expressed in CDN $000's except share amounts)
|
2018
|
2017
|
2018
|
2017
|
|
|
|
(Restated)
|
|
|
(Restated)
|
Revenue
|
$
|
23,327
|
$
|
17,569
|
$
|
49,243
|
$
|
33,442
|
|
|
|
|
|
|
|
|
|
Inventory production
costs expensed to cost of
sales
|
|
16,759
|
|
8,101
|
|
31,591
|
|
15,262
|
|
|
|
|
|
|
|
|
|
Gross margin before
the undernoted
|
|
6,568
|
|
9,468
|
|
17,652
|
|
18,180
|
|
|
|
|
|
|
|
|
|
Fair value changes in
biological assets included in
inventory sold and other
charges
|
|
51,496
|
|
12,848
|
|
77,884
|
|
23,632
|
Unrealized gain on
changes in fair value of
biological assets
|
|
(10,944)
|
|
(30,122)
|
|
(68,233)
|
|
(50,376)
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
(33,984)
|
|
26,742
|
|
8,001
|
|
44,924
|
|
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
39,047
|
|
7,638
|
|
56,313
|
|
14,043
|
Research and
development
|
|
1,944
|
|
494
|
|
2,700
|
|
627
|
General and
administration
|
|
37,101
|
|
8,393
|
|
56,689
|
|
15,886
|
Acquisition-related
costs
|
|
3,202
|
|
865
|
|
5,086
|
|
1,701
|
Share-based
compensation expense
|
|
45,025
|
|
5,862
|
|
68,097
|
|
8,743
|
Share-based
compensation expense related to
acquisition milestones
|
|
50,730
|
|
1,184
|
|
57,825
|
|
2,314
|
Depreciation and
amortization
|
|
3,595
|
|
3,283
|
|
6,625
|
|
6,827
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
180,644
|
|
27,719
|
|
253,335
|
|
50,141
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
(214,628)
|
|
(977)
|
|
(245,334)
|
|
(5,217)
|
|
|
|
|
|
|
|
|
|
Share of loss on
equity investments
|
|
(4,363)
|
|
(170)
|
|
(6,932)
|
|
(170)
|
Other income
(expense), net
|
|
(111,339)
|
|
241
|
|
(171,765)
|
|
(3,360)
|
Other income
(expense)
|
|
(115,702)
|
|
71
|
|
(178,697)
|
|
(3,530)
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(330,330)
|
|
(906)
|
|
(424,031)
|
|
(8,747)
|
|
|
|
|
|
|
|
|
|
Income tax (expense)
recovery
|
|
(284)
|
|
(707)
|
|
2,439
|
|
(2,040)
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(330,614)
|
$
|
(1,613)
|
$
|
(421,592)
|
$
|
(10,787)
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to:
|
|
|
|
|
|
|
|
|
Canopy Growth
Corporation
|
$
|
(337,136)
|
$
|
(1,338)
|
$
|
(417,413)
|
$
|
(10,392)
|
Non-controlling
interests
|
|
6,522
|
|
(275)
|
|
(4,179)
|
|
(395)
|
|
$
|
(330,614)
|
$
|
(1,613)
|
$
|
(421,592)
|
$
|
(10,787)
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
Net loss per share,
basic:
|
$
|
(1.52)
|
$
|
(0.01)
|
$
|
(1.98)
|
$
|
(0.07)
|
Weighted average
number of outstanding common
shares, basic:
|
|
221,725,511
|
|
167,226,218
|
|
210,972,889
|
|
165,550,073
|
CANOPY GROWTH
CORPORATION
|
CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
FOR THE THREE AND
SIX MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
|
|
Three Months
Ended
|
Six Months
Ended
|
UNAUDITED
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
(Expressed in CDN
$000's)
|
2018
|
2017
|
2018
|
2017
|
|
|
(Restated)
|
|
(Restated)
|
Net inflow (outflow)
of cash related to the following activities:
|
Operating
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(330,614)
|
$
|
(1,613)
|
$
|
(421,592)
|
$
|
(10,787)
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
6,785
|
|
2,301
|
|
10,446
|
|
4,036
|
Amortization of
intangible assets
|
|
2,604
|
|
2,990
|
|
5,236
|
|
6,312
|
Share of loss on
equity investments
|
|
4,363
|
|
170
|
|
6,932
|
|
170
|
Fair value changes in
biological assets included in
inventory sold and other charges
|
|
51,496
|
|
12,848
|
|
77,884
|
|
23,632
|
Unrealized gain on
changes in fair value of biological assets
|
|
(10,944)
|
|
(30,122)
|
|
(68,233)
|
|
(50,376)
|
Share-based
compensation
|
|
99,645
|
|
7,276
|
|
130,596
|
|
11,234
|
Loss on disposal of
property, plant and equipment and
intangible assets
|
|
-
|
|
25
|
|
1,840
|
|
168
|
Other
assets
|
|
(15,690)
|
|
3,354
|
|
(18,810)
|
|
3,354
|
Other income and
expense
|
|
112,957
|
|
(3,500)
|
|
169,269
|
|
|
Income tax (recovery)
expense
|
|
512
|
|
707
|
|
(2,439)
|
|
2,040
|
Non-cash interest and
FX impact on assets
|
|
(1,244)
|
|
-
|
|
(410)
|
|
-
|
Changes in non-cash
operating working capital
items
|
|
(50,365)
|
|
(4,916)
|
|
(88,855)
|
|
(12,655)
|
|
|
|
|
|
|
|
|
|
Net cash used in
operating activities
|
|
(130,495)
|
|
(10,480)
|
|
(198,136)
|
|
(22,872)
|
|
|
|
|
|
|
|
|
|
Investing
|
|
|
|
|
|
|
|
|
Purchases and deposits
of property, plant and equipment
and assets in process
|
|
(139,525)
|
|
(15,777)
|
|
(293,179)
|
|
(25,526)
|
Purchases of
intangible assets and intangibles in process
|
|
(3,525)
|
|
(248)
|
|
(6,340)
|
|
(282)
|
Proceeds on disposals
of property and equipment
|
|
-
|
|
75
|
|
|
|
75
|
Purchases of
restricted investments
|
|
(1,617)
|
|
(118)
|
|
(2,829)
|
|
(118)
|
Proceeds on assets
classified as held for sale
|
|
-
|
|
7,000
|
|
|
|
7,000
|
Investments in
associates
|
|
(38,939)
|
|
(5,937)
|
|
(42,439)
|
|
(5,937)
|
Investments in other
financial assets
|
|
(7,936)
|
|
(8,712)
|
|
(29,695)
|
|
(8,712)
|
Net cash outflow on
acquisition of BC Tweed NCI
|
|
(1,000)
|
|
-
|
|
(1,000)
|
|
-
|
Net cash outflow on
acquisition of Spectrum Chile
NCI
|
|
(999)
|
|
-
|
|
(999)
|
|
-
|
Net cash inflow
(outflow) on acquisition of subsidiaries
|
|
468
|
|
32
|
|
427
|
|
(359)
|
|
|
|
|
|
|
|
|
|
Net cash used in
investing activities
|
|
(193,073)
|
|
(23,685)
|
|
(376,054)
|
|
(33,859)
|
|
|
|
|
|
|
|
|
|
Financing
|
|
|
|
|
|
|
|
|
Payment of share issue
costs
|
|
(6,518)
|
|
1,336
|
|
(6,819)
|
|
(179)
|
Proceeds from issuance
of common shares
|
|
-
|
|
25,000
|
|
-
|
|
25,000
|
Proceeds from issuance
of shares by Canopy Rivers
|
|
90,431
|
|
(1,567)
|
|
91,218
|
|
35,113
|
Proceeds from exercise
of stock options
|
|
11,868
|
|
1,924
|
|
13,626
|
|
3,435
|
Proceeds from exercise
of warrants
|
|
-
|
|
527
|
|
133
|
|
527
|
Issuance of long-term
debt
|
|
-
|
|
-
|
|
600,000
|
|
-
|
Payment of long-term
debt issue costs
|
|
(335)
|
|
-
|
|
(16,380)
|
|
-
|
Repayment of finance
lease obligations
|
|
(50)
|
|
-
|
|
(104)
|
|
-
|
Repayment of long-term
debt
|
|
(323)
|
|
(338)
|
|
(643)
|
|
(754)
|
Net cash provided
by financing activities
|
|
95,073
|
|
26,882
|
|
681,031
|
|
63,142
|
|
|
|
|
|
|
|
|
|
Net cash
inflow
|
|
(228,495)
|
|
(7,283)
|
|
106,841
|
|
6,411
|
Cash and cash
equivalents, beginning of period
|
|
657,896
|
|
115,494
|
|
322,560
|
|
101,800
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
$
|
429,401
|
$
|
108,211
|
$
|
429,401
|
$
|
108,211
|
CANOPY GROWTH
CORPORATION
|
Adjusted
EBITDA1 Non-GAAP Measure
|
Three Months
Ended
|
Six Months
Ended
|
(In
CDN$000's)
|
September
30,
2018
|
September
30,
2017
|
September
30,
2018
|
September
30,
2017
|
|
|
(Restated)
|
|
(Restated)
|
Adjusted
EBITDA1 Reconciliation
|
|
|
|
|
|
|
|
|
Loss from
operations - as reported
|
$
|
(214,628)
|
$
|
(977)
|
$
|
(245,334)
|
$
|
(5,217)
|
|
|
|
|
|
|
|
|
|
IFRS fair value
accounting related to biological assets and
inventory
|
|
|
|
|
|
|
|
|
Fair value changes in
biological assets included in
inventory sold and other charges
|
|
51,496
|
|
12,848
|
|
77,884
|
|
23,632
|
Unrealized gain on
changes in fair value of
biological assets
|
|
(10,944)
|
|
(30,122)
|
|
(68,233)
|
|
(50,376)
|
|
|
40,552
|
|
(17,274)
|
|
9,651
|
|
(26,744)
|
Share-based
compensation expense (per
statement of cash flows)2
|
|
99,556
|
|
7,276
|
|
130,507
|
|
11,234
|
Excess space
provision included in general and
administration expenses
|
|
4,246
|
|
-
|
|
4,246
|
|
-
|
Acquisition
Costs
|
|
3,202
|
|
865
|
|
5,086
|
|
1,701
|
Depreciation and
amortization (per statement of
cash flows)
|
|
9,389
|
|
5,291
|
|
15,682
|
|
10,348
|
|
|
116,393
|
|
13,432
|
|
155,521
|
|
23,283
|
Adjusted
EBITDA
|
$
|
(57,683)
|
$
|
(4,819)
|
$
|
(80,162)
|
$
|
(8,678)
|
|
|
|
|
|
|
|
|
|
1 - Adjusted
EBITDA is Earnings Before Interest, Tax, and Depreciation, stock
compensation, fair value changes and other non-cash items, and as
adjusted for acquisition related items.
|
2 - Includes
$50,730 and $1,184 for the three months ended September 30, 2018
and 2017, respectively, in share-based compensation expense related
to acquisition milestones
|
View original
content:http://www.prnewswire.com/news-releases/canopy-growth-corporation-reports-second-quarter-fiscal-2019-financial-results-300750059.html
SOURCE Canopy Growth Corporation