Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) (“Cronos Group”
or the “Company”), today announces its 2021 Third Quarter business
results.
The Audit Committee of the Company's Board of
Directors has completed its evaluation of goodwill and
indefinite-lived intangible assets in the Company's U.S. reporting
unit for impairment. Following completion of this evaluation, and
on the recommendation of the Audit Committee and in consultation
with the Company’s independent auditor, KPMG LLP, the Board
determined that Cronos Group restate its unaudited interim
financial statements for the second quarter of 2021. Accordingly,
the Company recorded an impairment charge of $236.1 million on
goodwill and indefinite-lived intangible assets and on long-lived
assets in its U.S. reporting unit for the three and six months
ended June 30, 2021. The impairment charges have no impact on cash
and cash equivalents or revenues.
“We are pleased that the Audit Committee has
completed its evaluation, and that Cronos Group is now current with
the filing of our financial reports. As we move forward, we are
committed to improving our internal controls and financial
reporting practices, maintaining the highest standards of
transparency and accountability, and enhancing our capabilities and
resources across functions to support our strategy,” said Kurt
Schmidt, President and CEO, Cronos Group.
“As Cronos Group advances its strategy to build
disruptive intellectual property by advancing cannabis research,
technology and product development, we have determined that now is
the right time to realign the business around our brands by
centralizing functions under common leadership, managing expenses
and prioritizing our investments in innovation. Through this
realignment, our goal is to position Cronos Group to be able to
successfully assemble a portfolio of best-in-class brands, products
and intellectual property, while preserving the financial
flexibility to make additional strategic investments in our R&D
and brand pipeline as we innovate and evolve with our consumers’
wants and needs,” said Kurt Schmidt, President and CEO, Cronos
Group.
“In parallel, we continue to set our sights on
additional long-term opportunities in the U.S. cannabis market and
believe this realignment will lay important groundwork to support
that effort once federally permissible. We remain focused on
building long-term value for shareholders by continuing to build
Cronos Group into a leading global brand-led, consumer-focused
cannabis company.”
Financial Results
(in thousands of U.S.
dollars) |
|
Three months endedSeptember 30, |
|
Change |
|
Nine months endedSeptember 30, |
|
Change |
|
|
|
2021 |
|
|
|
2020 |
|
|
$ |
|
% |
|
|
2021 |
|
|
|
2020 |
|
|
$ |
|
% |
Net revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
$ |
2,100 |
|
|
$ |
1,639 |
|
|
$ |
461 |
|
|
28 |
% |
|
$ |
6,768 |
|
|
$ |
5,989 |
|
|
$ |
779 |
|
|
13 |
% |
Rest of World |
|
|
18,307 |
|
|
|
9,719 |
|
|
|
8,588 |
|
|
88 |
% |
|
|
41,872 |
|
|
|
23,684 |
|
|
|
18,188 |
|
|
77 |
% |
Consolidated net revenue |
|
|
20,407 |
|
|
|
11,358 |
|
|
|
9,049 |
|
|
80 |
% |
|
|
48,640 |
|
|
|
29,673 |
|
|
|
18,967 |
|
|
64 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
(730 |
) |
|
$ |
(1,537 |
) |
|
$ |
807 |
|
|
53 |
% |
|
$ |
(19,477 |
) |
|
$ |
(10,935 |
) |
|
$ |
(8,542 |
) |
|
(78 |
)% |
Gross margin |
|
(4 |
)% |
|
(14 |
)% |
|
N/A |
|
|
10 pp |
|
(40 |
)% |
|
(37 |
)% |
|
N/A |
|
|
(3) pp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (i) |
|
$ |
(46,773 |
) |
|
$ |
(30,079 |
) |
|
$ |
(16,694 |
) |
|
(56 |
)% |
|
$ |
(133,106 |
) |
|
$ |
(94,120 |
) |
|
$ |
(38,986 |
) |
|
(41 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
(ii) |
|
$ |
842,567 |
|
|
$ |
1,097,846 |
|
|
$ |
(255,279 |
) |
|
(23 |
)% |
|
|
|
|
|
|
|
|
Short-term investments
(ii) |
|
|
197,161 |
|
|
|
202,883 |
|
|
|
(5,722 |
) |
|
(3 |
)% |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
2,505 |
|
|
|
8,330 |
|
|
|
(5,825 |
) |
|
(70 |
)% |
|
|
11,695 |
|
|
|
24,428 |
|
|
|
(12,733 |
) |
|
(52 |
)% |
(i) See “Non-GAAP Measures” for
more information, including a reconciliation of adjusted earnings
(loss) before interest, taxes, depreciation and amortization
(“Adjusted EBITDA”)(ii) Dollar amounts are as of the
last day of the period indicated
Third Quarter 2021
- Net revenue of $20.4 million in Q3
2021 increased by $9.0 million from Q3 2020. The increase
year-over-year was primarily driven by continued growth in the
adult-use market in Canada, increased sales in the Israeli medical
cannabis market, and increased sales in the U.S. segment.
- Gross profit of $(0.7) million in
Q3 2021 improved by $0.8 million from Q3 2020. The increase in
gross profit year-over-year was primarily driven by an increase in
sales of cannabis extracts in the Rest of World (“ROW”) segment,
which carry a higher gross profit and gross margin than other
product categories.
- Adjusted EBITDA of $(46.8) million
in Q3 2021 decreased by $16.7 million from Q3 2020. The decrease
year-over-year was primarily driven by an increase in general and
administrative expenses primarily due to an increase in the
allowance for expected credit losses of $13.2 million, an increase
in sales and marketing costs primarily due to brand development in
the U.S. segment, and an increase in research and development
(“R&D”) costs driven by increased spending on product
development and developing cannabinoid intellectual property in the
ROW segment.
- Capital expenditures of $2.5
million in Q3 2021 decreased by $5.8 million from Q3 2020. The
decrease year-over-year was primarily driven by a reduction in
construction costs in the ROW segment and a decrease in costs
related to the implementation of the Company’s enterprise resource
planning system.
Business Updates
Strategic and Organizational
Update
As Cronos Group advances its strategy to build
disruptive intellectual property by advancing cannabis research,
technology and product development, the Company has determined that
now is the right time to realign the business around its brands.
The organizational and cost initiatives being undertaken are
intended to position Cronos Group to drive profitable and
sustainable growth over time. The program will consist of the
following:
- Centralizing functions under common
leadership to increase efficient distribution of resources, improve
strategic alignment and eliminate duplicative roles and costs;
- Evaluating the Company's global
supply chain and performing product reviews, and pricing and
distribution optimization in order to reduce fixed expenses and
reduce complexity; and
- Implementing an operating expense
target to optimize cash deployment for activities such as margin
accretive innovation and U.S. adult-use market entry.
The overall strategic realignment initiative is
expected to deliver $20 to $25 million in initially identified
savings across operating expense categories in 2022, primarily
driven by savings in sales and marketing, general and
administrative, and research and development.
Brand and Product Portfolio
In the third quarter of 2021, the Company
continued to build on the success of its dried flower portfolio
with the introduction of new high potency cultivars, Atomic Sour
Grapefruit and Cocoa Bomba, in select markets in Canada. These
launches, in addition to the launch of Spinach® GMO Cookies earlier
in 2021, are further solidifying the Company’s strength in the
dried flower category in the Canadian adult-use cannabis
market.
In October 2021, Cronos Group launched its first
cultured cannabinoid product, SPINACH FEELZ™ Chill Bliss 2:1
THC|CBG gummy. The SPINACH FEELZ™ Chill Bliss 2:1 THC|CBG gummy
builds on Cronos Group’s successful SOURZ by Spinach™ gummy
platform, utilizing the distinctive “S” shape with a proprietary
coating designed to provide a sour and sweet flavor profile. In
addition, in January 2022, the Company launched a 1-gram vape
featuring THC and CBG under the Spinach FEELZ™ brand in the
Canadian adult-use cannabis market. The Company, through the
SPINACH FEELZ™ brand, plans to produce a variety of cannabis
products that will prominently feature rare cannabinoids, designed
to deliver unique and enhanced experiences made possible through
proprietary blends of rare cannabinoids alongside more common
cannabinoids, like THC and CBD.
Global Supply Chain
In the third quarter of 2021, Cronos GrowCo, the
Company’s joint venture in Canada, continued to build on success of
its first harvest in the first quarter of 2021. With its processing
license in hand, Cronos GrowCo has begun selling to Canadian
license holders in the wholesale market. In addition, the Company
has begun purchasing dried flower from Cronos GrowCo, marking a
milestone in the evolution of the Company’s Canadian cannabis
supply chain.
Intellectual Property
Initiatives
In August 2021, Cronos Group announced the
achievement of the final productivity target in respect of
cannabigerolic acid (“CBGA”) under its strategic partnership (the
“Ginkgo Strategic Partnership”) with Ginkgo Bioworks Holdings, Inc.
(NYSE:DNA) (“Ginkgo”), which supported the launch of the Company’s
SPINACH FEELZ™ Chill Bliss 2:1 THC|CBG gummy. In November 2021,
Cronos Group achieved the final productivity target for a second
cannabinoid, cannabigerovarinic acid (“CBGVA”), which is a crucial
step to developing cultured tetrahydrocannabivarin (“THCV”),
releasing the second equity milestone to Ginkgo.
Appointments
In January 2022, the Company appointed Jeff
Jacobson Senior Vice President, Head of Growth (North America). Mr.
Jacobson previously served as the Company's General Manager of
Canada and Europe. Mr. Jacobson has been with Cronos Group since
December 2016 and previous to that was a co-founder of Peace
Naturals Project Inc. Mr. Jacobson's expertise and experience in
licensing and compliance, new business development, project
management and resource management help Cronos Group lead in
domestic and international markets.
Also in January 2022, the Company appointed John
Griese Senior Vice President, Head of Operations (North America).
Mr. Griese joined Cronos Group in August 2021 as the Vice President
of Operations. Mr. Griese has worked with several cannabis
organizations and was most recently the Chief Operating Officer
(“COO”) for The Supreme Cannabis Company, Inc. (“Supreme”). Prior
to Supreme, Mr. Griese garnered cannabis experience during
California’s adult use implementation as COO for global cannabis
company Creso Pharma Limited. Prior to that he spent the majority
of his career in supply chain and operations, with PepsiCo, Inc.,
Nestle and Sofina Foods Inc. Mr. Griese's experience in building
supply chains around the world will help the Company win in the
markets we are in today, while staying nimble in order to move fast
and pivot as the industry changes over time.
Rest of World Results
Cronos Group’s ROW reporting segment includes
results of the Company’s operations for all markets outside of the
U.S.
(in thousands of U.S.
dollars) |
|
Three months endedSeptember 30, |
|
Change |
|
Nine months endedSeptember 30, |
|
Change |
|
|
|
2021 |
|
|
|
2020 |
|
|
$ |
|
% |
|
|
2021 |
|
|
|
2020 |
|
|
$ |
|
% |
Cannabis flower |
|
$ |
15,306 |
|
|
$ |
7,958 |
|
|
$ |
7,348 |
|
|
92 |
% |
|
$ |
36,337 |
|
|
$ |
16,373 |
|
|
$ |
19,964 |
|
|
122 |
% |
Cannabis extracts |
|
|
2,786 |
|
|
|
1,504 |
|
|
|
1,282 |
|
|
85 |
% |
|
|
5,020 |
|
|
|
6,821 |
|
|
|
(1,801 |
) |
|
(26 |
)% |
Other |
|
|
215 |
|
|
|
257 |
|
|
|
(42 |
) |
|
(16 |
)% |
|
|
515 |
|
|
|
490 |
|
|
|
25 |
|
|
5 |
% |
Net revenue |
|
|
18,307 |
|
|
|
9,719 |
|
|
|
8,588 |
|
|
88 |
% |
|
|
41,872 |
|
|
|
23,684 |
|
|
|
18,188 |
|
|
77 |
% |
|
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
572 |
|
|
$ |
(2,203 |
) |
|
$ |
2,775 |
|
|
126 |
% |
|
$ |
(19,995 |
) |
|
$ |
(13,270 |
) |
|
$ |
(6,725 |
) |
|
(51 |
)% |
Gross margin |
|
|
3 |
% |
|
(23 |
)% |
|
N/A |
|
|
26 pp |
|
(48 |
)% |
|
(56 |
)% |
|
N/A |
|
|
8 pp |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (i) |
|
$ |
(29,760 |
) |
|
$ |
(14,371 |
) |
|
$ |
(15,389 |
) |
|
(107 |
)% |
|
$ |
(84,549 |
) |
|
$ |
(61,999 |
) |
|
$ |
(22,550 |
) |
|
(36 |
)% |
(i) See “Non-GAAP Measures” for
more information, including a reconciliation of Adjusted
EBITDA
Third Quarter 2021
- Net revenue of $18.3 million in Q3
2021 increased by $8.6 million from Q3 2020. The increase
year-over-year was primarily driven by growth in the adult-use
cannabis flower and extracts categories in Canada and sales in the
Israeli medical cannabis market.
- Gross profit of $0.6 million in Q3
2021 increased by $2.8 million from Q3 2020. The increase
year-over-year was primarily driven by increased sales of cannabis
extracts, which carry higher gross profit and gross margin than
other product categories.
- Adjusted EBITDA of $(29.8) million
in Q3 2021 decreased by $15.4 million from Q3 2020. The decrease
year-over-year was primarily driven by an increase in general and
administrative expenses primarily due to an increase in the
allowance for expected credit losses of $13.2 million, an increase
in R&D costs driven by increased spending on product
development and developing cannabinoid intellectual property, and
an increase in sales and marketing expenses.
United States Results
Cronos Group’s U.S. reporting segment includes results of the
Company’s operations for all brands and products in the U.S.
(in thousands of U.S.
dollars) |
|
Three months endedSeptember 30, |
|
Change |
|
Nine months endedSeptember 30, |
|
Change |
|
|
|
2021 |
|
|
|
2020 |
|
|
$ |
|
% |
|
|
2021 |
|
|
|
2020 |
|
|
$ |
|
% |
Net revenue |
|
$ |
2,100 |
|
|
$ |
1,639 |
|
|
$ |
461 |
|
|
28 |
% |
|
$ |
6,768 |
|
|
$ |
5,989 |
|
|
$ |
779 |
|
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
(1,302 |
) |
|
$ |
666 |
|
|
$ |
(1,968 |
) |
|
(295 |
)% |
|
$ |
518 |
|
|
$ |
2,335 |
|
|
$ |
(1,817 |
) |
|
(78 |
)% |
Gross margin |
|
(62 |
)% |
|
|
41 |
% |
|
N/A |
|
|
(103) pp |
|
|
8 |
% |
|
|
39 |
% |
|
N/A |
|
|
(31) pp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (i) |
|
$ |
(12,200 |
) |
|
$ |
(5,687 |
) |
|
$ |
(6,513 |
) |
|
(115 |
)% |
|
$ |
(32,421 |
) |
|
$ |
(16,254 |
) |
|
$ |
(16,167 |
) |
|
(99 |
)% |
(i) See “Non-GAAP Measures” for
more information, including a reconciliation of Adjusted
EBITDA.
Third Quarter 2021
- Net revenue of $2.1 million in Q3
2021 increased by $0.5 million from Q3 2020. The increase
year-over-year was primarily driven by the introduction of new U.S.
hemp-derived CBD products.
- Gross profit of $(1.3) million in
Q3 2021 decreased by $2.0 million from Q3 2020. The decrease
year-over-year was primarily due to increased inventory valuation
adjustments and increased production costs.
- Adjusted EBITDA of
$(12.2) million in Q3 2021 decreased by $6.5 million from Q3
2020. The decrease year-over-year was primarily driven by an
increase in sales and marketing costs related to brand development
and an increase in general and administrative expenses.
Conference Call
The Company will host a conference call and live
audio webcast on Friday, February 18, 2022, at 8:30 a.m. EST to
discuss 2021 Third Quarter business results. An audio replay of the
call will be archived on the Company’s website for replay.
Instructions for the conference call are provided below:
- Live audio webcast:
https://ir.thecronosgroup.com/events-presentations
- Toll-Free from the U.S. and Canada dial-in: (866) 795-2258
- International dial-in: (409) 937-8902
- Conference ID: 3219205
About Cronos Group
Cronos Group is an innovative global cannabinoid
company with international production and distribution across four
continents. Cronos Group is committed to building disruptive
intellectual property by advancing cannabis research, technology
and product development. With a passion to responsibly elevate the
consumer experience, Cronos Group is building an iconic brand
portfolio. Cronos Group’s diverse international brand portfolio
includes Spinach®, PEACE NATURALS®, Lord Jones®, Happy Dance® and
PEACE+™. For more information about Cronos Group and its brands,
please visit: thecronosgroup.com.
Forward-Looking Statements
This press release may contain information that
may constitute forward-looking information and forward-looking
statements within the meaning of applicable securities laws
(collectively, “Forward-Looking Statements”), which are based upon
our current internal expectations, estimates, projections,
assumptions and beliefs. All information that is not clearly
historical in nature may constitute Forward-Looking Statements. In
some cases, Forward-Looking Statements can be identified by the use
of forward-looking terminology such as “expect”, “likely”, “may”,
“will”, “should”, “intend”, “anticipate”, “potential”, “proposed”,
“estimate” and other similar words, expressions and phrases,
including negative and grammatical variations thereof, or
statements that certain events or conditions “may” or “will”
happen, or by discussion of strategy. Forward-Looking Statements
include estimates, plans, expectations, opinions, forecasts,
projections, targets, guidance or other statements that are not
statements of historical fact.
Forward-Looking Statements include, but are not
limited to, statements with respect to:
- expectations related to our
realignment and any progress, challenges and effects related
thereto as well as changes in strategy, metrics, investments,
reporting structure, costs, operating expenses, employee turnover
and other changes with respect thereto;
- the uncertainties associated with
the COVID-19 pandemic, including our ability, and the abilities of
our joint ventures and our suppliers and distributors, to
effectively deal with the restrictions, limitations and health
issues presented by the COVID-19 pandemic, the ability to continue
our production, distribution and sale of our products, and demand
for and the use of our products by consumers;
- laws and regulations and any
amendments thereto applicable to our business and the impact
thereof, including uncertainty regarding the application of United
States (“U.S.”) state and federal law to U.S. hemp (including CBD
and other U.S. hemp-derived cannabinoids) products and the scope of
any regulations by the U.S. Food and Drug Administration, the U.S.
Drug Enforcement Administration, the U.S. Federal Trade Commission,
the U.S. Patent and Trademark Office and any state equivalent
regulatory agencies over U.S. hemp (including CBD and other U.S.
hemp-derived cannabinoids) products;
- the laws and regulations and any
amendments thereto relating to the U.S. hemp industry in the U.S.,
including the promulgation of regulations for the U.S. hemp
industry by the U.S. Department of Agriculture and relevant state
regulatory authorities;
- 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;
- our ability to successfully create
and launch brands and further create, launch and scale U.S.
hemp-derived consumer products and cannabis products;
- the benefits, viability, safety,
efficacy, dosing and social acceptance of cannabis including CBD
and other cannabinoids;
- expectations regarding the
implementation and effectiveness of key personnel changes;
- the anticipated benefits and impact
of Altria Group Inc.’s investment in the Company (the “Altria
Investment”), pursuant to a subscription agreement dated December
7, 2018;
- the potential exercise of one
warrant of the Company included as part of the Altria Investment,
pre-emptive rights and/or top-up rights in connection with the
Altria Investment, including proceeds to us that may result
therefrom;
- expectations regarding the use of
proceeds of equity financings, including the proceeds from the
Altria Investment;
- the legalization of the use of
cannabis for medical or adult-use 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;
- expectations regarding the
potential success of, and the costs and benefits associated with,
our joint ventures, strategic alliances and equity investments,
including the Ginkgo Strategic Partnership;
- our ability to execute on our
strategy and the anticipated benefits of such strategy;
- expectations of the amount or
frequency of impairment losses, including as a result of the
write-down of intangible assets, including goodwill;
- the ongoing impact of the
legalization of additional cannabis product types and forms for
adult-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 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 R&D
initiatives in cannabinoids, or the success thereof;
- expectations regarding acquisitions
and dispositions and the anticipated benefits therefrom;
- uncertainties as to our ability to
exercise an option to buy Class A shares of common stock of
PharmaCann Inc. (the "PharmaCann Option") in the near term or the
future in full or in part, including the uncertainties as to the
status and future development of federal legalization of cannabis
in the U.S. and our ability to realize the anticipated benefits of
the transaction with PharmaCann Inc. ("PharmaCann");
- 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;
- expectations regarding our growing,
production and supply chain capacities;
- expectations regarding the
resolution of litigation and other legal and regulatory
proceedings, reviews and investigations;
- expectations with respect to future
production costs;
- expectations with respect to future
sales and distribution channels and networks;
- the expected methods to be used to
distribute and sell our products;
- the anticipated future gross
margins of our operations;
- accounting standards and
estimates;
- our ability to timely and
effectively remediate any material weaknesses in our internal
control over financial reporting; 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) our ability, and the abilities of our joint ventures and our
suppliers and distributors, to effectively deal with the
restrictions, limitations and health issues presented by the
COVID-19 pandemic and the ability to continue our production,
distribution and sale of our products and customer demand for and
use of our products; (ii) management’s perceptions of historical
trends, current conditions and expected future developments; (iii)
our ability to generate cash flow from operations; (iv) general
economic, financial market, regulatory and political conditions in
which we operate; (v) the production and manufacturing capabilities
and output from our facilities and our joint ventures, strategic
alliances and equity investments; (vi) consumer interest in our
products; (vii) competition; (viii) anticipated and unanticipated
costs; (ix) government regulation of our activities and products,
including but not limited to the areas of taxation and
environmental protection; (x) the timely receipt of any required
regulatory authorizations, approvals, consents, permits and/or
licenses; (xi) our ability to obtain qualified staff, equipment and
services in a timely and cost-efficient manner; (xii) our ability
to conduct operations in a safe, efficient and effective manner;
(xiii) our ability to realize anticipated benefits, synergies or
generate revenue, profits or value from our recent acquisitions
into our existing operations; (xiv) our ability to realize the
expected cost-savings, efficiencies and other benefits of our
realignment and employee turnover related thereto; (xv) our ability
to complete planned dispositions, and, if completed, obtain our
anticipated sales price; (xvi) our ability to exercise the
PharmaCann Option and realize the anticipated benefits of the
transactions with PharmaCann; and (xvii) 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 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
demand for and use of our products; the risk that cost savings and
any other synergies from the Altria Investment may not be fully
realized or may take longer to realize than expected; the risk that
we will not complete planned dispositions, or, if completed, obtain
our anticipated sales price; the implementation and effectiveness
of key personnel changes; the risks that our realignment will not
result in the expected cost-savings, efficiencies and other
benefits or will result in greater than anticipated turnover in
personnel; future levels of revenues; consumer demand for cannabis
and U.S. hemp products; our ability to manage disruptions in credit
markets or changes to our credit ratings; future levels of capital,
environmental or maintenance expenditures, general and
administrative and other expenses; the success or timing of
completion of ongoing or anticipated capital or maintenance
projects; 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, regulatory or other
proceedings, or threatened litigation or 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 (including U.S.
federal), state, provincial, territorial or local regulatory
authorities or self-regulatory organizations; changes in regulatory
requirements in relation to our business and products; legal or
regulatory obstacles that could prevent us from being able to
exercise the PharmaCann Option and thereby realizing the
anticipated benefits of the transaction with PharmaCann; dilution
of our fully-diluted ownership of PharmaCann and the loss of our
rights as a result of that dilution; our remediation of material
weaknesses in our internal control over financial reporting and the
improvement of our control environment and our systems, processes
and procedures; and the factors discussed under Part I, Item 1A,
“Risk Factors” of the Company’s Annual Report on Form 10-K for the
year ended December 31, 2020, the Company’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2021 (as amended) and the
Company’s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2021. 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 not to place undue reliance on these
Forward-Looking Statements because of their inherent uncertainty
and to appreciate the limited purposes for which they are being
used by management. 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. 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.
As used in this press release, “CBD” means
cannabidiol and “U.S. hemp” has the meaning given to the term
“hemp” in the U.S. Agricultural Improvement Act of 2018, including
hemp-derived CBD.
Cronos Group
Inc.Condensed Consolidated Balance
Sheets(In thousands of U.S. dollars, except share
amounts)
|
As of September 30, 2021 |
|
As of December 31, 2020 |
Assets |
(Unaudited) |
|
(Audited) |
Current assets |
|
|
|
Cash and cash equivalents |
$ |
842,567 |
|
|
$ |
1,078,023 |
|
Short-term investments |
|
197,161 |
|
|
|
211,766 |
|
Accounts receivable, net |
|
14,669 |
|
|
|
8,928 |
|
Other receivables |
|
1,723 |
|
|
|
10,033 |
|
Current portion of loans receivable, net |
|
5,779 |
|
|
|
7,083 |
|
Prepaids and other current assets |
|
10,196 |
|
|
|
11,161 |
|
Inventory, net |
|
31,769 |
|
|
|
44,002 |
|
Held-for-sale assets |
|
— |
|
|
|
1,176 |
|
Total current assets |
|
1,103,864 |
|
|
|
1,372,172 |
|
Investments in equity accounted investees, net |
|
19,094 |
|
|
|
19,235 |
|
Other investments |
|
110,392 |
|
|
|
— |
|
Loan receivable, net |
|
81,464 |
|
|
|
87,191 |
|
Property, plant and equipment, net |
|
188,644 |
|
|
|
187,599 |
|
Right-of-use assets |
|
9,386 |
|
|
|
9,776 |
|
Intangible assets, net |
|
20,471 |
|
|
|
69,720 |
|
Goodwill |
|
1,104 |
|
|
|
179,522 |
|
Other assets |
|
780 |
|
|
|
467 |
|
Total assets |
$ |
1,535,199 |
|
|
$ |
1,925,682 |
|
|
|
|
|
Liabilities |
|
|
|
Current liabilities |
|
|
|
Accounts payable and other liabilities |
$ |
32,115 |
|
|
$ |
42,102 |
|
Current portion of lease obligation |
|
2,959 |
|
|
|
1,322 |
|
Derivative liabilities |
|
34,528 |
|
|
|
163,410 |
|
Total current liabilities |
|
69,602 |
|
|
|
206,834 |
|
Due to non-controlling interests |
|
1,829 |
|
|
|
2,188 |
|
Lease obligation |
|
7,343 |
|
|
|
8,492 |
|
Total liabilities |
|
78,774 |
|
|
|
217,514 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
Share capital |
|
586,878 |
|
|
|
569,260 |
|
Additional paid-in capital |
|
30,373 |
|
|
|
34,596 |
|
Retained earnings |
|
793,277 |
|
|
|
1,064,509 |
|
Accumulated other comprehensive income |
|
48,926 |
|
|
|
42,999 |
|
Total equity attributable to shareholders of Cronos Group |
|
1,459,454 |
|
|
|
1,711,364 |
|
Non-controlling interests |
|
(3,029 |
) |
|
|
(3,196 |
) |
Total shareholders’ equity |
|
1,456,425 |
|
|
|
1,708,168 |
|
Total liabilities and shareholders’ equity |
$ |
1,535,199 |
|
|
$ |
1,925,682 |
|
Cronos Group Inc.Condensed Consolidated Statements of
Net Income (Loss) and Comprehensive Income (Loss)(In
thousands of U.S. dollars, except share and per share amounts,
unaudited)
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Net revenue, before excise taxes |
$ |
24,590 |
|
|
$ |
13,621 |
|
|
$ |
58,092 |
|
|
$ |
34,397 |
|
Excise taxes |
|
(4,183 |
) |
|
|
(2,263 |
) |
|
|
(9,452 |
) |
|
|
(4,724 |
) |
Net revenue |
|
20,407 |
|
|
|
11,358 |
|
|
|
48,640 |
|
|
|
29,673 |
|
Cost of sales |
|
21,137 |
|
|
|
12,895 |
|
|
|
56,156 |
|
|
|
29,584 |
|
Inventory write-down |
|
— |
|
|
|
— |
|
|
|
11,961 |
|
|
|
11,024 |
|
Gross
profit |
|
(730 |
) |
|
|
(1,537 |
) |
|
|
(19,477 |
) |
|
|
(10,935 |
) |
Operating expenses |
|
|
|
|
|
|
|
Sales and marketing |
|
10,821 |
|
|
|
7,236 |
|
|
|
34,284 |
|
|
|
20,849 |
|
Research and development |
|
6,473 |
|
|
|
4,734 |
|
|
|
16,774 |
|
|
|
12,955 |
|
General and administrative |
|
32,546 |
|
|
|
18,860 |
|
|
|
76,869 |
|
|
|
61,048 |
|
Share-based payments |
|
2,667 |
|
|
|
7,916 |
|
|
|
7,731 |
|
|
|
12,898 |
|
Depreciation and amortization |
|
1,251 |
|
|
|
886 |
|
|
|
3,029 |
|
|
|
2,252 |
|
Impairment loss on goodwill and indefinite-lived intangible
assets |
|
142 |
|
|
|
— |
|
|
|
235,056 |
|
|
|
40,000 |
|
Impairment loss on long-lived assets |
|
1,784 |
|
|
|
— |
|
|
|
4,739 |
|
|
|
— |
|
Total operating expenses |
|
55,684 |
|
|
|
39,632 |
|
|
|
378,482 |
|
|
|
150,002 |
|
Operating loss |
|
(56,414 |
) |
|
|
(41,169 |
) |
|
|
(397,959 |
) |
|
|
(160,937 |
) |
Other income (expense) |
|
|
|
|
|
|
|
Interest income, net |
|
2,064 |
|
|
|
3,781 |
|
|
|
6,686 |
|
|
|
15,266 |
|
Gain on revaluation of derivative liabilities |
|
132,916 |
|
|
|
105,307 |
|
|
|
131,290 |
|
|
|
182,795 |
|
Share of loss from equity accounted investments |
|
(1,414 |
) |
|
|
(1,327 |
) |
|
|
(4,172 |
) |
|
|
(3,293 |
) |
Gain on disposal of other investments |
|
— |
|
|
|
3,974 |
|
|
|
— |
|
|
|
4,743 |
|
Other, net |
|
273 |
|
|
|
(641 |
) |
|
|
1,184 |
|
|
|
(625 |
) |
Total other income |
|
133,839 |
|
|
|
111,094 |
|
|
|
134,988 |
|
|
|
198,886 |
|
Income
(loss) before income taxes |
|
77,425 |
|
|
|
69,925 |
|
|
|
(262,971 |
) |
|
|
37,949 |
|
Income
tax expense (benefit) |
|
(159 |
) |
|
|
988 |
|
|
|
(159 |
) |
|
|
988 |
|
Income
(loss) from continuing operations |
|
77,584 |
|
|
|
68,937 |
|
|
|
(262,812 |
) |
|
|
36,961 |
|
Income (loss) from discontinued operations |
|
82 |
|
|
|
(473 |
) |
|
|
(500 |
) |
|
|
(519 |
) |
Net income (loss) |
|
77,666 |
|
|
|
68,464 |
|
|
|
(263,312 |
) |
|
|
36,442 |
|
Net loss
attributable to non-controlling interest |
|
(250 |
) |
|
|
(569 |
) |
|
|
(842 |
) |
|
|
(1,654 |
) |
Net income (loss) attributable to Cronos Group |
$ |
77,916 |
|
|
$ |
69,033 |
|
|
$ |
(262,470 |
) |
|
$ |
38,096 |
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
Net income (loss) |
$ |
77,666 |
|
|
$ |
68,464 |
|
|
$ |
(263,312 |
) |
|
$ |
36,442 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
Foreign exchange gain (loss) on translation |
|
(22,818 |
) |
|
|
26,167 |
|
|
|
6,936 |
|
|
|
(35,654 |
) |
Total other comprehensive income (loss) |
|
(22,818 |
) |
|
|
26,167 |
|
|
|
6,936 |
|
|
|
(35,654 |
) |
Comprehensive income (loss) |
|
54,848 |
|
|
|
94,631 |
|
|
|
(256,376 |
) |
|
|
788 |
|
Less:
comprehensive income (loss) attributable to non-controlling
interests |
|
(265 |
) |
|
|
(552 |
) |
|
|
167 |
|
|
|
(1,650 |
) |
Comprehensive income (loss) attributable to Cronos Group |
$ |
55,113 |
|
|
$ |
95,183 |
|
|
$ |
(256,543 |
) |
|
$ |
2,438 |
|
Net income (loss) per share |
|
|
|
|
|
|
|
Basic - continuing operations |
$ |
0.21 |
|
|
$ |
0.20 |
|
|
$ |
(0.71 |
) |
|
$ |
0.11 |
|
Diluted - continuing operations |
|
0.21 |
|
|
|
0.18 |
|
|
|
(0.71 |
) |
|
|
0.10 |
|
Weighted average number of outstanding shares |
|
|
|
|
|
|
|
Basic |
|
372,456,354 |
|
|
|
350,288,783 |
|
|
|
369,097,920 |
|
|
|
349,397,156 |
|
Diluted |
|
375,653,248 |
|
|
|
373,863,414 |
|
|
|
369,097,920 |
|
|
|
374,121,557 |
|
Cronos Group Inc.Condensed
Consolidated Statements of Cash Flows(In thousands of U.S.
dollars, except share amounts, unaudited)
|
Nine months ended September 30, |
|
|
2021 |
|
|
|
2020 |
|
Operating
activities |
|
|
|
Net income (loss) |
$ |
(263,312 |
) |
|
$ |
36,442 |
|
Adjustments to reconcile net
income (loss) to cash provided by operating activities: |
|
|
|
Share-based payments |
|
7,731 |
|
|
|
12,898 |
|
Depreciation and amortization |
|
8,911 |
|
|
|
5,095 |
|
Impairment loss on goodwill and indefinite-lived intangible
assets |
|
235,056 |
|
|
|
40,000 |
|
Impairment loss on long-lived assets |
|
4,739 |
|
|
|
— |
|
Share of loss from investments in equity accounted investees |
|
4,172 |
|
|
|
3,293 |
|
Gain on revaluation of derivative liabilities |
|
(131,290 |
) |
|
|
(182,795 |
) |
Gain on disposal of other investments |
|
— |
|
|
|
(4,743 |
) |
Expected credit losses on long-term financial assets |
|
13,162 |
|
|
|
1,573 |
|
Other non-cash operating activities, net |
|
(2,831 |
) |
|
|
105 |
|
Changes in operating assets
and liabilities: |
|
|
|
Accounts receivable, net |
|
(5,747 |
) |
|
|
262 |
|
Other receivables |
|
7,431 |
|
|
|
(3,707 |
) |
Prepaids and other current assets |
|
1,054 |
|
|
|
(1,338 |
) |
Inventory |
|
14,335 |
|
|
|
(14,961 |
) |
Accounts payable and other liabilities |
|
(11,089 |
) |
|
|
1,333 |
|
Cash flows used in operating
activities |
|
(117,678 |
) |
|
|
(106,543 |
) |
Investing
activities |
|
|
|
Purchase of short-term investments |
|
(119,820 |
) |
|
|
(125,562 |
) |
Proceeds from short-term investments |
|
135,801 |
|
|
|
220,058 |
|
Purchase of other investments |
|
(110,392 |
) |
|
|
— |
|
Proceeds from sale of other investments |
|
— |
|
|
|
4,743 |
|
Purchase of property, plant and equipment |
|
(10,651 |
) |
|
|
(21,334 |
) |
Purchase of intangible assets |
|
(1,044 |
) |
|
|
(3,094 |
) |
Proceeds from sale of held-for-sale assets |
|
2,775 |
|
|
|
— |
|
Advances on loans receivable |
|
(6,905 |
) |
|
|
(37,000 |
) |
Cash flows provided by (used in) investing activities |
|
(110,236 |
) |
|
|
37,811 |
|
Financing
activities |
|
|
|
Withholding taxes paid on share-based awards |
|
(13,182 |
) |
|
|
(2,148 |
) |
Other financing activities, net |
|
18 |
|
|
|
(182 |
) |
Cash flows used in financing activities |
|
(13,164 |
) |
|
|
(2,330 |
) |
Effect of foreign currency
translation on cash and cash equivalents |
|
5,622 |
|
|
|
(30,785 |
) |
Net change in cash and cash equivalents |
|
(235,456 |
) |
|
|
(101,847 |
) |
Cash and cash equivalents,
beginning of period |
|
1,078,023 |
|
|
|
1,199,693 |
|
Cash and cash equivalents, end of period |
$ |
842,567 |
|
|
$ |
1,097,846 |
|
Supplemental cash flow
information |
|
|
|
Interest paid |
$ |
— |
|
|
$ |
156 |
|
Interest received |
|
4,025 |
|
|
|
13,473 |
|
Income taxes paid |
|
873 |
|
|
|
— |
|
Non-GAAP Measures
Cronos Group reports its financial results in
accordance with Generally Accepted Accounting Principles in the
United States (“U.S. GAAP”). This press release refers to measures
not recognized under U.S. GAAP (“non-GAAP measures”). These
non-GAAP measures do not have a standardized meaning prescribed by
U.S. GAAP and are therefore unlikely to be comparable to similar
measures presented by other companies. Rather, these non-GAAP
measures are provided as a supplement to corresponding U.S. GAAP
measures to provide additional information regarding the results of
operations from management’s perspective. Accordingly, non-GAAP
measures should not be considered a substitute for, or superior to,
the financial information prepared and presented in accordance with
U.S. GAAP. All non-GAAP measures presented in this press release
are reconciled to their closest reported U.S. GAAP measure.
Reconciliations of historical adjusted financial measures to
corresponding U.S. GAAP measures are provided below.
Adjusted EBITDA
Management reviews Adjusted EBITDA, a non-GAAP
measure which excludes non-cash items and items that do not reflect
management’s assessment of on-going business performance of our
operating segments. Management defines Adjusted EBITDA as net
income (loss) before interest, tax expense, depreciation and
amortization adjusted for: share of loss from equity accounted
investments; impairment loss on goodwill and indefinite-lived
assets; impairment loss on long-lived assets; loss (gain) on
revaluation of derivative liabilities; transaction costs related to
strategic projects; other, net; loss from discontinued operations;
share-based payments; and review and investigation costs related to
the restatements of the Company’s 2021 and 2019 interim financial
statements, the Company’s responses to the reviews of such interim
financial statements by various regulatory authorities and legal
costs defending shareholder class action complaints brought against
the Company as a result of the 2019 restatement.
Management believes that Adjusted EBITDA
provides the most useful insight into underlying business trends
and results and provides a more meaningful comparison of
period-over-period results. Management uses Adjusted EBITDA for
planning, forecasting and evaluating business and financial
performance, including allocating resources and evaluating results
relative to employee compensation targets.
The following tables set forth a reconciliation
of net loss as determined in accordance with U.S. GAAP to Adjusted
EBITDA for the periods indicated (U.S. dollars in thousands):
(in thousands of U.S.
dollars) |
Three months ended September 30, 2021 |
|
United States |
|
Rest of World |
|
Corporate |
|
Total |
Net income (loss) |
$ |
(13,499 |
) |
|
$ |
97,198 |
|
|
$ |
(6,033 |
) |
|
$ |
77,666 |
|
Interest income, net |
|
(4 |
) |
|
|
(2,060 |
) |
|
|
— |
|
|
|
(2,064 |
) |
Income tax benefit |
|
— |
|
|
|
(159 |
) |
|
|
— |
|
|
|
(159 |
) |
Share of loss from equity accounted investments |
|
— |
|
|
|
1,414 |
|
|
|
— |
|
|
|
1,414 |
|
Impairment loss on goodwill and indefinite-lived intangible
assets |
|
105 |
|
|
|
37 |
|
|
|
— |
|
|
|
142 |
|
Impairment loss on long-lived assets |
|
— |
|
|
|
1,784 |
|
|
|
— |
|
|
|
1,784 |
|
Gain on revaluation of derivative liabilities |
|
— |
|
|
|
(132,916 |
) |
|
|
— |
|
|
|
(132,916 |
) |
Transaction costs |
|
— |
|
|
|
— |
|
|
|
542 |
|
|
|
542 |
|
Other, net |
|
— |
|
|
|
(273 |
) |
|
|
— |
|
|
|
(273 |
) |
Income from discontinued operations |
|
— |
|
|
|
(82 |
) |
|
|
— |
|
|
|
(82 |
) |
Share-based payments |
|
967 |
|
|
|
1,700 |
|
|
|
— |
|
|
|
2,667 |
|
Financial statement review costs |
|
— |
|
|
|
— |
|
|
|
678 |
|
|
|
678 |
|
Depreciation and amortization |
|
231 |
|
|
|
3,597 |
|
|
|
— |
|
|
|
3,828 |
|
Adjusted EBITDA |
$ |
(12,200 |
) |
|
$ |
(29,760 |
) |
|
$ |
(4,813 |
) |
|
$ |
(46,773 |
) |
(in thousands of U.S.
dollars) |
Three months ended September 30, 2020 |
|
United States |
|
Rest of World |
|
Corporate |
|
Total |
Net income (loss) |
$ |
(12,425 |
) |
|
$ |
91,868 |
|
|
$ |
(10,979 |
) |
|
$ |
68,464 |
|
Interest income, net |
|
30 |
|
|
|
(3,811 |
) |
|
|
— |
|
|
|
(3,781 |
) |
Income tax expense |
|
143 |
|
|
|
845 |
|
|
|
— |
|
|
|
988 |
|
Share of loss from equity accounted investments |
|
— |
|
|
|
1,327 |
|
|
|
— |
|
|
|
1,327 |
|
Gain on revaluation of derivative liabilities |
|
— |
|
|
|
(105,307 |
) |
|
|
— |
|
|
|
(105,307 |
) |
Gain on disposal of other investments |
|
— |
|
|
|
(3,974 |
) |
|
|
— |
|
|
|
(3,974 |
) |
Other, net |
|
61 |
|
|
|
580 |
|
|
|
— |
|
|
|
641 |
|
Loss from discontinued operations |
|
— |
|
|
|
473 |
|
|
|
— |
|
|
|
473 |
|
Share-based payments |
|
6,469 |
|
|
|
1,447 |
|
|
|
— |
|
|
|
7,916 |
|
Financial statement review costs |
|
— |
|
|
|
— |
|
|
|
958 |
|
|
|
958 |
|
Depreciation and amortization |
|
35 |
|
|
|
2,181 |
|
|
|
— |
|
|
|
2,216 |
|
Adjusted EBITDA |
$ |
(5,687 |
) |
|
$ |
(14,371 |
) |
|
$ |
(10,021 |
) |
|
$ |
(30,079 |
) |
(in thousands of U.S.
dollars) |
Nine months ended September 30, 2021 |
|
United States |
|
Rest of World |
|
Corporate |
|
Total |
Net income (loss) |
$ |
(273,438 |
) |
|
$ |
34,678 |
|
|
$ |
(24,552 |
) |
|
$ |
(263,312 |
) |
Interest income, net |
|
(27 |
) |
|
|
(6,659 |
) |
|
|
— |
|
|
|
(6,686 |
) |
Income tax benefit |
|
— |
|
|
|
(159 |
) |
|
|
— |
|
|
|
(159 |
) |
Share of loss from equity accounted investments |
|
— |
|
|
|
4,172 |
|
|
|
— |
|
|
|
4,172 |
|
Impairment loss on goodwill and indefinite-lived intangible
assets |
|
235,019 |
|
|
|
37 |
|
|
|
— |
|
|
|
235,056 |
|
Impairment loss on long-lived assets |
|
2,955 |
|
|
|
1,784 |
|
|
|
— |
|
|
|
4,739 |
|
Gain on revaluation of derivative liabilities |
|
— |
|
|
|
(131,290 |
) |
|
|
— |
|
|
|
(131,290 |
) |
Transaction costs |
|
— |
|
|
|
— |
|
|
|
3,801 |
|
|
|
3,801 |
|
Other, net |
|
— |
|
|
|
(1,184 |
) |
|
|
— |
|
|
|
(1,184 |
) |
Loss from discontinued operations |
|
— |
|
|
|
500 |
|
|
|
— |
|
|
|
500 |
|
Share-based payments |
|
2,534 |
|
|
|
5,197 |
|
|
|
— |
|
|
|
7,731 |
|
Financial statement review costs |
|
— |
|
|
|
— |
|
|
|
4,615 |
|
|
|
4,615 |
|
Depreciation and amortization |
|
536 |
|
|
|
8,375 |
|
|
|
— |
|
|
|
8,911 |
|
Adjusted EBITDA |
$ |
(32,421 |
) |
|
$ |
(84,549 |
) |
|
$ |
(16,136 |
) |
|
$ |
(133,106 |
) |
(in thousands of U.S.
dollars) |
Nine months ended September 30, 2020 |
|
United States |
|
Rest of World |
|
Corporate |
|
Total |
Net income (loss) |
$ |
(64,507 |
) |
|
$ |
125,640 |
|
|
$ |
(24,691 |
) |
|
$ |
36,442 |
|
Interest income, net |
|
14 |
|
|
|
(15,280 |
) |
|
|
— |
|
|
|
(15,266 |
) |
Income tax expense |
|
143 |
|
|
|
845 |
|
|
|
— |
|
|
|
988 |
|
Share of loss from equity accounted investments |
|
— |
|
|
|
3,293 |
|
|
|
— |
|
|
|
3,293 |
|
Impairment loss on goodwill and indefinite-lived intangible
assets |
|
40,000 |
|
|
|
— |
|
|
|
— |
|
|
|
40,000 |
|
Gain on revaluation of derivative liabilities |
|
— |
|
|
|
(182,795 |
) |
|
|
— |
|
|
|
(182,795 |
) |
Gain on disposal of other investments |
|
— |
|
|
|
(4,743 |
) |
|
|
— |
|
|
|
(4,743 |
) |
Other, net |
|
61 |
|
|
|
564 |
|
|
|
— |
|
|
|
625 |
|
Loss from discontinued operations |
|
— |
|
|
|
519 |
|
|
|
— |
|
|
|
519 |
|
Share-based payments |
|
7,931 |
|
|
|
4,967 |
|
|
|
— |
|
|
|
12,898 |
|
Financial statement review costs |
|
— |
|
|
|
— |
|
|
|
8,824 |
|
|
|
8,824 |
|
Depreciation and amortization |
|
104 |
|
|
|
4,991 |
|
|
|
— |
|
|
|
5,095 |
|
Adjusted EBITDA |
$ |
(16,254 |
) |
|
$ |
(61,999 |
) |
|
$ |
(15,867 |
) |
|
$ |
(94,120 |
) |
Foreign currency exchange
rates
All currency amounts in this press
release are stated in U.S. dollars (“USD”), which is
our reporting currency, unless otherwise noted. All references to
“dollars” or “$” are to USD. The assets and liabilities
of the Company's foreign operations are translated into USD at the
exchange rate in effect as of September 30, 2021,
September 30, 2020 and December 31, 2020. Transactions
affecting shareholders’ equity are translated at historical foreign
exchange rates. The consolidated statements of net income (loss)
and comprehensive income (loss) and the consolidated statements of
cash flows of the Company’s foreign operations are translated into
USD by applying the average foreign exchange rate in effect for the
reporting period using Bloomberg.
The exchange rates used to translate from USD to
Canadian dollars (“C$”) is shown below:
(Exchange rates are shown as
C$ per $) |
As of |
|
September 30, 2021 |
|
September 30, 2020 |
|
December 31, 2020 |
Average rate |
1.2593 |
|
1.3323 |
|
1.3036 |
Spot rate |
1.2680 |
|
1.3308 |
|
1.2751 |
Year-to-date average rate |
1.2519 |
|
1.3539 |
|
1.3411 |
For further information, please
contact:Shayne LaidlawInvestor RelationsTel: (416)
504-0004investor.relations@thecronosgroup.com
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