Canopy Growth Corp (CGC) 10-Q Quarterly Report August 2021

SMITHS FALLS, ON — Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX:WEED, NASDAQ:CGC) today announces its financial results for the first quarter fiscal 2022 ended June 30, 2021. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.

Highlights

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Achieved 23% revenue growth in Q1 2022 versus Q1 2021 driven by strong double-digit growth in both cannabis and other consumer products businesses.

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Maintained #1 market share¹ in tracked Canadian recreational cannabis market amid a highly competitive landscape.

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Completed acquisition of Ace Valley and Supreme Cannabis, with commercial and operational Integration progressing smoothly.

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Led by consumer insights, a robust innovation pipeline with over 100+ SKUs across key product categories set to hit store shelves from Q2 2022 to Q4 2022.

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Momentum with cannabis reform increasing as the Company continues to build its U.S. presence through broad portfolio of innovative CBD and CPG brands.

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Remains committed to accelerating top-line growth in the second half of fiscal 2022 and achieving positive Adjusted EBITDA by end of fiscal 2022.

“With the right strategy and strong foundation in place we are confident in our ability to deliver long-term success as Canopy’s products and brands continue to demonstrate their appeal to consumers in our core markets,” said David Klein, CEO, Canopy Growth. “While we’re encouraged by regulatory advancement in the U.S., Canopy is not waiting as we continue to scale our business on both sides of the border with an exciting product pipeline planned for the coming quarters.”

“We’re continuing to drive cost savings and operational efficiencies across the company, and remain broadly on track to our target of $150-$200 million in fiscal 2022- fiscal 2023,” added Mike Lee, CFO. “We look forward to scaling our new operating model in coming months as we push forward our profitability goals in fiscal year 2022.”

First Quarter Fiscal 2022 Financial Summary

(in millions of Canadian dollars, unaudited)	Net revenue	Gross margin percentage	Adjusted gross margin percentage²	Net income (loss)	Adjusted EBITDA³	Free cash flow⁴
Reported	$136.2	20%	21%	$390.0	$(63.6)	$(186.1)
vs. Q1 2021	23%	1,400 bps	1,400 bps	404%	31%	(3%)

Unless otherwise indicated, market share data disclosed in this press release is calculated using the Company’s internal proprietary market share tool that utilizes point of sales data supplied by a third-party data provider, government agencies and our own retail store operations across the country. The tool captures point of sale data from an average of 30% of stores in Alberta, British Columbia, Saskatchewan, Manitoba and Newfoundland & Labrador, point of sale data from 100% of stores in New Brunswick, Nova Scotia and Prince Edward Island, as well as depletions and e-commerce sales data from the OCS.

Adjusted gross margin is a non-GAAP measure, and for Q1 2022 excludes $1.4 million related to the flow-through of inventory step-up associated with the acquisition of Supreme Cannabis (Q1 2021 - excludes $1.2 million related to the flow-through of inventory step-up associated with fiscal 2020 business combinations). See "Non-GAAP Measures".

³	Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures".

⁴	Free cash flow is a non-GAAP measure. See "Non-GAAP Measures".

The following information was filed by Canopy Growth Corp (CGC) on Friday, August 6, 2021 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Canopy Growth Corp's 10-Q Quarterly Report:

Financial - Earnings Highlight
Management calculates Adjusted EBITDA as the reported net income (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 impairments and restructuring costs; restructuring costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition-related costs.

Financial - Earnings Highlight
The year-over-year increase in the gross margin percentage was primarily due to (i) the improvement in our Canadian cannabis business, as described above in our analysis of gross margin on a consolidated basis; and (ii) payroll subsidies in the amount of $7.3 million received from the Canadian government in the first quarter of fiscal 2022, pursuant to a COVID-19 relief program.
Financial - Income Highlight
The increase of $4.4 million in the current income tax expense arose primarily in connection with legal entities that generated income for tax purposes that could not be reduced by the group's tax attributes.
Financial - Cash Flow Highlight
While we have incurred net losses on a U.S. GAAP basis and Adjusted EBITDA losses to date, and our cash and cash equivalents have decreased $594.8 million from March 31, 2021 (and, together with short-term investments, decreased $248.1 million from March 31, 2021), as discussed in the "Cash Flows" section below, management anticipates the success and eventual profitability of the business.
Legal - Other Highlight
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.
Other - Other
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Financial - Expense
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Asset impairments related to periodic...Read more
Other - Other
Partially offsetting these decreases in...Read more
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Partially offsetting these factors was...Read more
Financial - Earnings
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The Accretion Debentures are payable...Read more
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Other - Other
The total principal amount owing,...Read more
Other - Other
Charges totaling $89.2 million were...Read more
Revenue - Product
Other cannabis revenue was $8.0...Read more
Other - Other
The year-over-year decrease is primarily...Read more
M & A - Other
On June 22, 2021, we...Read more
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The decrease of $316.3 million...Read more
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Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

Canopy Growth Corp provided additional information to their SEC Filing as exhibits

Exhibit 10.4: Material Contract

Exhibit 10.5: Material Contract

Exhibit 10.10: Material Contract

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32.1: Section 1350 Certification

Exhibit 32.2: Section 1350 Certification

Ticker: CGC
CIK: 1737927
Form Type: 10-Q Quarterly Report
Accession Number: 0001564590-21-042161
Submitted to the SEC: Fri Aug 06 2021 4:31:32 PM EST
Accepted by the SEC: Fri Aug 06 2021
Period: Wednesday, June 30, 2021
Industry: Medicinal Chemicals And Botanical Products