Continued progress of premiumization strategy and record quarter from BioSteel accelerating path to profitability
Highlights
- Q1 FY2023 net revenue was flat compared to Q4 FY20221.
- Company maintained #1 share of combined premium flower and pre-rolled joint ("PRJ") segment in Q1 FY20232.
- Increased share of the combined mainstream flower and PRJ segment by 35 bps to 4.0% in Q1 FY2023.
- International medical cannabis net revenue approximately doubled versus Q1 FY2022 driven primarily by strong sales in
Israel andAustralia . - Record BioSteel revenues in Q1 FY2023 increased 169% versus Q1 FY2022. Secured retail agreement with
Walmart Stores covering 2,200 stores in 39 states. Entered partnership to become the Official Hydration Partner of the NHL and NHLPA. - Cost reduction program on track with operating expenses3 in Q1 FY2023 decreasing by 13% versus Q1 FY2022.
"Through advancements in our North American brand led strategy we delivered a record quarter from BioSteel and maintained #1 share in the premium flower and pre-rolled joint segment, while driving growth of our premium Doja and mainstream Tweed brands. As our
"The cost saving program announced earlier in the quarter combined with sound expense discipline contributed to a meaningful decline in operating expenses during the quarter. We expect cost savings to ramp in the second half of the year, enabling us to execute on our path to profitability even as we continue to invest in strategic growth initiatives including in BioSteel and our
First Quarter Fiscal 2023 Financial Summary
(in millions of Canadian dollars, unaudited) | Net Revenue | Gross margin percentage | Adjusted gross margin percentage4 | Net loss5 | Adjusted EBITDA6 | Free cash flow7 | |
Reported | (1 %) | 2 % | |||||
vs. Q1 FY2022 | (19 %) | (2,100) bps | (1,900) bps | (635 %) | (18 %) | 23 % |
1 | On an organic basis, excluding C3. |
2 | 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 third-party data providers, government agencies and our own retail store operations across the country. |
3 | Non-GAAP measure. Excludes Asset Impairment and Restructuring costs, and Acquisition-Related costs. |
4 | Adjusted gross margin is a non-GAAP measure, and for Q1 FY2023 excludes |
5 | Net loss includes a non-cash goodwill impairment of |
6 | Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures". |
7 | Free cash flow is a non-GAAP measure. See "Non-GAAP Measures". |
Revenues:
Net revenue of
Gross margin:
Reported gross margin in Q1 FY2023 was (1%) as compared to 20% in Q1 FY2022. Excluding non-cash restructuring costs recorded in COGS of
Operating expenses:
Total SG&A ("SG&A") expenses in Q1 FY2023 declined by 8% versus Q1 FY2022, driven by year-over-year reductions in General & Administrative and Research and Development expenses, offset by increases in Sales and Marketing.
The Company recognized a non-cash goodwill impairment of
Net Loss:
Net Loss in Q1 FY2023 was
Adjusted EBITDA:
Adjusted EBITDA loss in Q1 FY2023 was $75 million, an
Free Cash Flow:
Free Cash Flow in Q1 FY2023 was an outflow of $143 million, a 23% decrease in outflow versus Q1 FY2022. Relative to Q1 FY2022, the Free Cash Flow outflow decrease reflects a decrease in the cash used for operating activities and optimizing our capital expenditures as part of the previously-noted restructuring actions.
Cash Position:
Cash and short-term investments amounted to $1.2 billion at
Strong brand performance and innovation are helping stabilize market share in core segments of the Canadian recreational cannabis market
- Maintained
Canopy Growth's #1 share in combined premium flower and PRJ segment in Q1 FY2023. With a continued focus on premium NPD, Canopy launched 11 new premium flower and PRJ products in Q1 FY2023 which resulted in brand share of Doja in the premium flower and PRJ segment increasing 13 bps to 2.1%. - Maintained share in the combined mainstream flower and PRJ segment with the introduction of 6 new mainstream flower and PRJ offerings in Q1 FY2023. Strong consumer demand for new flower strains increased the Tweed brand's share of the combined mainstream flower and PRJ segment by 35 bps to 4.0% in Q1 FY2023.
- Consumer demand for new Ready-to-Drink ("RTD") beverage flavour extensions under the Deep Space and Tweed brand banners helped increase the Company's share of RTD beverage category by 33 bps to 23%. The Deep Space brand maintained its #2 rank in the over 5 mg THC beverage category. Strong consumer demand for the Tweed portfolio of Iced Tea and Fizz beverages increased the Tweed brand's share of the RTD beverage market by 136 bps to 10.4% and maintained the brand's #1 market share rank in the under 5 mg THC beverage category.
- Robust NPD pipeline including a combined 26 premium and mainstream flower and PRJ offerings expected in Q2 FY2023 secured 60 new listings across
Alberta ,Ontario andQuebec .
Medical cannabis revenues increasing, with multiple potential growth drivers
- International medical cannabis net revenue doubled versus Q1 FY2022 driven primarily by strong sales in
Israel andAustralia . Sales force inGermany focused on expanding pharmacy network. - Critical focus of Canadian medical cannabis business on increasing veteran registrations through the Spectrum Veteran Care program.
Gains in distribution and sales velocity of BioSteel RTD drove record revenue in Q1 FY2023
- BioSteel revenue in Q1 FY2023 increased 169% versus Q1 FY2022 with BioSteel RTDs achieving 21% ACV8, up from 3% in Q1 FY2022. Agreement secured with Walmart for product to blanket 2,200 stores across 39 states.
- BioSteel entered partnership to become the Official Hydration Partner of the NHL and NHLPA. Sponsorship will provide the BioSteel brand with league-wide rink side marketing and product supply rights, retail activation rights, community engagement platforms, player marketing and activation rights.
- Wana9 continued their North American expansion by entering
Puerto Rico andArkansas in addition to opening three additional states. Building on the success of its Optimals line, including Wana Optimals Fast Asleep, which ranks as the No. 1 Quick onset sleep gummie inNorth America , Wana has added a variety of new SKUs to a range of markets. - Acreage Holdings10 made strong progress in the first quarter of calendar 2022 with revenue increasing 48% year over year and delivered their 5th consecutive quarter of positive Adjusted EBITDA. In
April 2022 , Acreage commenced adult-use operations inNew Jersey with their flagship brand, The Botanist, now available for adult-use consumers in multiple dispensaries in the state.
8 | IRI data for the 4 weeks ended |
9 | Until such time as the Company elects to exercise its rights to acquire |
10 | Until such time as the Company elects to exercise its rights to acquire Acreage Holdings, the Company will have no direct or indirect economic or voting interests in Acreage Holdings, the Company will not directly or indirectly control Acreage Holdings, and the Company, on the one hand, and Acreage Holdings, on the other hand, will continue to operate independently of one another. |
First Quarter Fiscal 2023 Revenue Review
Revenue by Channel
(in millions of Canadian dollars, unaudited) | Q1 FY2023 | Q1 FY2022 | Vs. Q1 FY2022 | |
Canadian recreational cannabis | ||||
Business to business11 | (38 %) | |||
Business to consumer | (28 %) | |||
(35 %) | ||||
Canadian medical cannabis12 | (1 %) | |||
(29 %) | ||||
International and other | ||||
C3 | $- | (100 %) | ||
Other13 | 73 % | |||
(29 %) | ||||
Global cannabis net revenue | (29 %) | |||
Other consumer products | ||||
Storz & Bickel | (35 %) | |||
This Works | (15 %) | |||
BioSteel14 | 169 % | |||
Other | (18 %) | |||
Other consumer products revenue | 1 % | |||
Net revenue | (19 %) |
11 | For Q1 FY2023, amount is net of excise taxes of |
12 | For Q1 FY2023, amount is net of excise taxes of |
13 | For Q1 FY2023, amount reflects other revenue adjustments of |
14 | For Q1 FY2023, amount reflects other revenue adjustments of |
Revenue by Form
(in millions of Canadian dollars, unaudited) | Q1 FY2023 | Q1 FY2022 | Vs. Q1 FY2022 | |
Canadian recreational cannabis | ||||
Dry bud15,16 | (42 %) | |||
Oils and softgels15,16 | (9 %) | |||
Beverages, edibles, topicals and vapes15,16 | (19 %) | |||
Other revenue adjustments16 | 80 % | |||
Excise taxes | 35 % | |||
(35 %) | ||||
Medical cannabis and other17 | ||||
Dry bud | 48 % | |||
Oils and soft gels | (55 %) | |||
Beverages, edibles, topicals and vapes | 19 % | |||
Excise taxes | 14 % | |||
(17 %) | ||||
Global cannabis net revenue | (29 %) | |||
Other consumer products | ||||
Storz & Bickel | (35 %) | |||
This Works | (15 %) | |||
BioSteel17 | 169 % | |||
Other | (18 %) | |||
Other consumer products revenue | 1 % | |||
Net revenue | (19 %) |
Canadian Cannabis
- Recreational B2B net sales in Q1 FY2023 decreased 38% over the prior year period primarily due to the continuing impacts of price compression resulting from increased competition and lower sales in the value-priced dried flower category. These factors were partially offset by a more favourable product mix due primarily to a decrease in the volume of value-priced dried product sold compared to the prior year and a full quarter of net revenue contribution from Supreme Cannabis.
- Recreational B2C net sales in Q1 FY2023 decreased 28% versus Q1 FY2022 largely driven by increased competition from the rapid increase in third party retail locations across provinces.
- Medical net revenue in Q1 FY2023 decreased 1% from Q1 FY2022 driven primarily by higher average order sizes offset by a fewer number of orders.
International Cannabis
- C3 revenue in Q1 FY2023 decreased 100% year-over-year as a result of the divestiture that was completed on
January 31, 2022 . - Other revenue in Q1 FY2023 increased 73% over the prior year period primarily due to bulk cannabis sales by Supreme Cannabis into the
Israel medical cannabis market and increasing global medical sales including toAustralia .
Other Consumer Products
- BioSteel sales in Q1 FY2023 increased 169% over Q1 FY2022 in part due to continued growth in our distribution channels and sales velocities across
North America and higher international sales. - Storz & Bickel vaporizer revenue in Q1 FY2023 decreased 35% over Q1 FY2022 due primarily to temporary disruptions with certain distributors and slowdown in consumer spending in
North America andEurope . - This Works sales in Q1 FY2023 decreased 15% over Q1 FY2022 due in part to softer performance of certain product lines, which benefited during the period of COVID-19 restrictions in Q1 FY2022 and the phasing of orders for certain products in
Europe to Q2 FY2023.
The Q1 FY2023 and Q1 FY2022 financial results presented in this press release have been prepared in accordance with
15 | Excludes the impact of other revenue adjustments. |
16 | Other revenue adjustments represent the Company's determination of returns and pricing adjustments and relate to the Canadian recreational business‐to‐business channel. |
17 | Includes the impact of other revenue adjustments, which represent the Company's determination of returns and other pricing adjustments. |
Webcast and Conference Call Information
The Company will host a conference call and audio webcast with
Webcast Information
A live audio webcast will be available at https://app.webinar.net/bXk1q7d6DRl
Replay Information
A replay will be accessible by webcast until
Non-GAAP Measures
Adjusted EBITDA is a non-GAAP measure used by management that is not defined by
Free Cash Flow is a non- GAAP measure used by management that is not defined by
Adjusted Gross Margin and Adjusted Gross Margin Percentage are non-GAAP measures used by management that are not defined by
About
Notice Regarding Forward Looking Statements
This press release contains "forward-looking statements" within the meaning of applicable securities laws, which involve certain known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as "intend," "goal," "strategy," "estimate," "expect," "project," "projections," "forecasts," "plans," "seeks," "anticipates," "potential," "proposed," "will," "should," "could," "would," "may," "likely," "designed to," "foreseeable future," "believe," "scheduled" and other similar expressions. Our actual results or outcomes may differ materially from those anticipated. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
Forward-looking statements include, but are not limited to, statements with respect to:
- the uncertainties associated with the COVID-19 pandemic, including our ability, and the ability of our suppliers and distributors, to effectively manage 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 the demand for and use of our products by consumers, disruptions to the global and local economies due to related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations and a reduction in discretionary consumer spending;
- laws and regulations and any amendments thereto applicable to our business and the impact thereof, including uncertainty regarding the application of
U.S. state and federal law toU.S. hemp (including CBD) products and the scope of any regulations by theU.S. Food and Drug Administration (the "FDA"), theU.S. Drug Enforcement Administration (the "DEA"), theU.S. Federal Trade Commission (the "FTC"), theU.S. Patent and Trademark Office (the "USPTO"), theU.S. Department of Agriculture (the "USDA") and any state equivalent regulatory agencies overU.S. hemp (including CBD) products; - expectations regarding the amount or frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill.
- expectations related to our announcement of certain restructuring actions (the "Restructuring Actions") and any progress, challenges and effects related thereto as well as changes in strategy, metrics, investments, costs, operating expenses, employee turnover and other changes with respect thereto.
- our ability to refinance debt as and when required on terms favorable to us and comply with covenants contained in our debt facilities and debt instruments.
- expectations regarding the laws and regulations and any amendments thereto relating to the
U.S. hemp industry in theU.S. , including the promulgation of regulations for theU.S. hemp industry by theUSDA and relevant state regulatory authorities. - expectations regarding the potential success of, and the costs and benefits associated with, our acquisitions, joint ventures, strategic alliances, equity investments and dispositions;
- the amended plan of arrangement with Acreage Holdings, Inc., including the consummation of such acquisition.
- the definitive agreements with
Mountain High Products, LLC ,Wana Wellness, LLC andThe Cima Group, LLC (each, a "Wana Entity"), including the consummation of the acquisition of each Wana Entity. - 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 cannabis-based products and
U.S. hemp-derived consumer products in jurisdictions where such products are legal and that we currently operate in. - the benefits, viability, safety, efficacy, dosing and social acceptance of cannabis, including CBD and other cannabinoids.
- the anticipated benefits and impact of the investments in us (the "CBI Group Investments") from Constellation Brands, Inc. ("CBI") and its affiliates (together, the "
CBI Group "). - the potential exercise of the warrants held by the
CBI Group , pre-emptive rights and/or top-up rights held by theCBI Group , including proceeds to us that may result therefrom. - expectations regarding the use of proceeds of equity financings, including the proceeds from the CBI Group Investments.
- the legalization of the use of cannabis for medical or recreational in jurisdictions outside of
Canada , the related timing and impact thereof and our intentions to participate in such markets, if and when such use is legalized. - our ability to execute on our strategy and the anticipated benefits of such strategy.
- the ongoing impact of the legalization of additional cannabis product types and forms for recreational use in
Canada , including federal, provincial, territorial and municipal regulations pertaining thereto, the related timing and impact thereof and our intentions to participate in such markets. - the ongoing impact of developing provincial, territorial and municipal regulations pertaining to the sale and distribution of cannabis, the related timing and impact thereof, as well as the restrictions on federally regulated cannabis producers participating in certain retail markets and our intentions to participate in such markets to the extent permissible.
- the timing and nature of legislative changes in the
U.S. regarding the regulation of cannabis including tetrahydrocannabinol ("THC"). - the future performance of our business and operations.
- our competitive advantages and business strategies.
- the competitive conditions of the industry.
- the expected growth in the number of customers using our products.
- our ability or plans to identify, develop, commercialize or expand our technology and research and development initiatives in cannabinoids, or the success thereof.
- expectations regarding revenues, expenses and anticipated cash needs.
- expectations regarding cash flow, liquidity and sources of funding.
- expectations regarding capital expenditures.
- the expansion of our production and manufacturing, the costs and timing associated therewith and the receipt of applicable production and sale licenses.
- the expected growth in our growing, production and supply chain capacities.
- expectations regarding the resolution of litigation and other legal 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.
- our future product offerings.
- the anticipated future gross margins of our operations.
- accounting standards and estimates.
- expectations regarding our distribution network.
- expectations regarding the costs and benefits associated with our contracts and agreements with third parties, including under our third-party supply and manufacturing agreements; and
- expectations on price changes in cannabis markets.
Certain of the forward-looking statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.
The forward-looking statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including: (i) management's perceptions of historical trends, current conditions and expected future developments; (ii) our ability to generate cash flow from operations; (iii) general economic, financial market, regulatory and political conditions in which we operate; (iv) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (v) consumer interest in our products; (vi) competition; (vii) anticipated and unanticipated costs; (viii) government regulation of our activities and products including but not limited to the areas of taxation and environmental protection; (ix) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; * our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xi) our ability to conduct operations in a safe, efficient and effective manner; (xii) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; (xiii) our ability to continue to operate in light of the COVID-19 pandemic and the impact of the pandemic on demand for, and sales of, our products and our distribution channels; and (xiv) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.
By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release and other reports we file with, or furnish to, the
Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management's current expectations and plans relating to the future, and the reader is cautioned that the forward-looking statements may not be appropriate for any other purpose. While we believe that the assumptions and expectations reflected in the forward-looking statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-looking statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by law. The forward-looking statements contained in this press release and other reports we file with, or furnish to, the
Schedule 1
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (in thousands of Canadian dollars, except number of shares and per share data, unaudited) | ||||
2022 | March 31, 2022 | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | ||||
Short-term investments | 447,620 | 595,651 | ||
Restricted short-term investments | 12,177 | 12,216 | ||
Amounts receivable, net | 96,626 | 96,443 | ||
Inventory | 205,513 | 204,387 | ||
Prepaid expenses and other assets | 62,141 | 52,700 | ||
Total current assets | 1,593,572 | 1,737,402 | ||
Other financial assets | 602,229 | 800,328 | ||
Property, plant and equipment | 926,369 | 942,780 | ||
Intangible assets | 242,479 | 252,695 | ||
138,419 | 1,866,503 | |||
Other assets | 14,459 | 15,342 | ||
Total assets | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Accounts payable | ||||
Other accrued expenses and liabilities | 59,913 | 75,278 | ||
Current portion of long-term debt | 193,072 | 9,296 | ||
Other liabilities | 86,776 | 64,054 | ||
Total current liabilities | 404,408 | 212,898 | ||
Long-term debt | 1,264,645 | 1,491,695 | ||
Deferred income tax liabilities | 14,658 | 15,991 | ||
Liability arising from Acreage Arrangement | - | 47,000 | ||
Warrant derivative liability | 1,555 | 26,920 | ||
Other liabilities | 149,341 | 190,049 | ||
Total liabilities | 1,834,607 | 1,984,553 | ||
Commitments and contingencies | ||||
Redeemable noncontrolling interest | 37,150 | 36,200 | ||
Common shares - $nil par value; Authorized - unlimited number of shares; Issued - 417,217,611 shares and 394,422,604 shares, respectively | 7,601,570 | 7,482,809 | ||
Additional paid-in capital | 2,515,453 | 2,519,766 | ||
Accumulated other comprehensive loss | (21,554) | (42,282) | ||
Deficit | (8,454,214) | (6,370,337) | ||
1,641,255 | 3,589,956 | |||
Noncontrolling interests | 4,515 | 4,341 | ||
Total shareholders' equity | 1,645,770 | 3,594,297 | ||
Total liabilities and shareholders' equity |
Schedule 2
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of Canadian dollars, except number of shares and per share data, unaudited) | ||||
Three months ended | ||||
2022 | 2021 | |||
Revenue | ||||
Excise taxes | 12,747 | 19,214 | ||
Net revenue | 110,115 | 136,209 | ||
Cost of goods sold | 111,507 | 108,971 | ||
Gross margin | (1,392) | 27,238 | ||
Operating expenses: | ||||
Selling, general and administrative expenses | 103,413 | 112,574 | ||
Share-based compensation | 5,439 | 13,126 | ||
Asset impairment and restructuring costs | 1,727,985 | 89,249 | ||
Total operating expenses | 1,836,837 | 214,949 | ||
Operating loss | (1,838,229) | (187,711) | ||
Loss from equity method investments | - | (100) | ||
Other income (expense), net | (245,578) | 580,666 | ||
(Loss) income before income taxes | (2,083,807) | 392,855 | ||
Income tax expense | (3,749) | (2,900) | ||
Net (loss) income | (2,087,556) | 389,955 | ||
Net loss attributable to noncontrolling interests and redeemable noncontrolling interest | (4,408) | (2,463) | ||
Net (loss) income attributable to | ||||
Basic (loss) earnings per share | ||||
Basic weighted average common shares outstanding | 398,467,568 | 384,055,133 | ||
Diluted (loss) earnings per share | ||||
Diluted weighted average common shares outstanding | 398,467,568 | 404,546,243 |
Schedule 3
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of Canadian dollars, unaudited) | ||||
Three months ended | ||||
2022 | 2021 | |||
Cash flows from operating activities: | ||||
Net (loss) income | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation of property, plant and equipment | 15,129 | 17,116 | ||
Amortization of intangible assets | 6,722 | 8,016 | ||
Share of loss on equity method investments | - | 100 | ||
Share-based compensation | 5,439 | 13,126 | ||
Asset impairment and restructuring costs | 1,726,877 | 81,709 | ||
Income tax expense | 3,749 | 2,900 | ||
Non-cash fair value adjustments and charges related to settlement of convertible senior notes | 213,610 | (600,922) | ||
Change in operating assets and liabilities, net of effects from purchases of businesses: | ||||
Amounts receivable | (183) | (4,946) | ||
Inventory | (1,126) | (18,158) | ||
Prepaid expenses and other assets | (9,555) | (8,804) | ||
Accounts payable and accrued liabilities | (15,549) | (9,644) | ||
Other, including non-cash foreign currency | 1,928 | (36,228) | ||
Net cash used in operating activities | (140,515) | (165,780) | ||
Cash flows from investing activities: | ||||
Purchases of and deposits on property, plant and equipment | (2,293) | (20,279) | ||
Purchases of intangible assets | (606) | (833) | ||
Redemption (purchases) of short-term investments | 153,996 | (346,603) | ||
Net cash proceeds (outflows) on sale of subsidiaries | (475) | 10,324 | ||
Sale of (investments in) equity method investments | - | 56 | ||
Investment in other financial assets | (29,205) | - | ||
Net cash outflow on acquisition of subsidiaries | - | (8,857) | ||
Other investing activities | - | (8,367) | ||
Net cash provided by (used in) investing activities | 121,417 | (374,559) | ||
Cash flows from financing activities: | ||||
Proceeds from exercise of stock options | 210 | 3,592 | ||
Repayment of long-term debt | (211) | (48,116) | ||
Other financing activities | (1,043) | (444) | ||
Net cash (used in) provided by financing activities | (1,044) | (44,968) | ||
Effect of exchange rate changes on cash and cash equivalents | 13,632 | (9,506) | ||
Net decrease in cash and cash equivalents | (6,510) | (594,813) | ||
Cash and cash equivalents, beginning of period | 776,005 | 1,154,653 | ||
Cash and cash equivalents, end of period |
Schedule 4
Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure)
Three months ended | ||||
(in thousands of Canadian dollars except where indicated; unaudited) | 2022 | 2021 | ||
Net revenue | ||||
Gross margin, as reported | (1,392) | 27,238 | ||
Adjustments to gross margin: | ||||
Restructuring costs recorded in cost of good sold | 3,961 | - | ||
Charges related to the flow-through of inventory step-up on business combinations | - | 1,414 | ||
Adjusted gross margin1 | ||||
Adjusted gross margin percentage1 | 2 % | 21 % | ||
1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See "Non-GAAP Measures". |
Schedule 5
Adjusted EBITDA1 Reconciliation (Non-GAAP Measure)
Three months ended | ||||
(in thousands of Canadian dollars, unaudited) | 2022 | 2021 | ||
Net (loss) income | ||||
Income tax expense | 3,749 | 2,900 | ||
Other (income) expense, net | 245,578 | (580,666) | ||
Loss on equity method investments | - | 100 | ||
Share-based compensation2 | 5,439 | 13,126 | ||
Acquisition-related costs | 4,193 | 5,780 | ||
Depreciation and amortization2 | 21,851 | 25,132 | ||
Asset impairment and restructuring costs | 1,727,985 | 78,618 | ||
Restructuring costs recorded in cost of goods sold | 3,961 | - | ||
Charges related to the flow-through of inventory step-up on business combinations | - | 1,414 | ||
Adjusted EBITDA1 | ||||
1Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures". | ||||
2 From Consolidated Statements of Cash Flows. |
Schedule 6
Free Cash Flow Reconciliation1 (Non-GAAP Measure)
Three months ended | ||||
(in thousands of Canadian dollars, unaudited) | 2022 | 2021 | ||
Net cash used in operating activities | ||||
Purchases of and deposits on property, plant and equipment | (2,293) | (20,279) | ||
Free cash flow1 | ||||
1Free cash flow is a non-GAAP measure. See "Non-GAAP Measures". |
Schedule 7
Segmented Gross Margin Reconciliation
Three months ended | ||||
(in thousands of Canadian dollars, unaudited) | 2022 | 2021 | ||
Global cannabis segment | ||||
Net revenue | ||||
Cost of goods sold | 81,668 | 79,570 | ||
Gross margin | (15,472) | 13,369 | ||
Gross margin percentage | (23 %) | 14 % | ||
Other consumer products segment | ||||
Revenue | ||||
Cost of goods sold | 29,839 | 29,401 | ||
Gross margin | 14,080 | 13,869 | ||
Gross margin percentage | 32 % | 32 % |
Schedule 8
Segmented Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure)
Three months ended | ||||
(in thousands of Canadian dollars except where indicated; unaudited) | 2022 | 2021 | ||
Global cannabis segment | ||||
Net revenue | ||||
Gross margin, as reported | (15,472) | 13,369 | ||
Adjustments to gross margin: | ||||
Restructuring costs recorded in cost of good sold | 3,300 | - | ||
Charges related to the flow-through of inventory step-up on business combinations | - | 1,414 | ||
Adjusted gross margin1 | ||||
Adjusted gross margin percentage1 | (18 %) | 16 % | ||
Other consumer products segment | ||||
Revenue | ||||
Gross margin, as reported | 14,080 | 13,869 | ||
Adjustments to gross margin: | ||||
Restructuring costs recorded in cost of good sold | 661 | - | ||
Adjusted gross margin1 | ||||
Adjusted gross margin percentage1 | 34 % | 32 % | ||
1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See "Non-GAAP Measures". |
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