Canopy Growth (CGC) Reports Q4 Revenues of Cdn$115.07 million

Canopy Growth (NYSE: CGC) reported Q4 EPS of (Cdn$3.72), versus (Cdn$1.10) reported last year. Revenue for the quarter came in at Cdn$115.07 million, versus Cdn$106.49 million reported last year.

Fourth Quarter Fiscal 2020 Corporate Financial Highlights

• Revenues: Net revenue in Q4 2020 decreased 13% versus Q3 2020 driven primarily by lower Canadian recreational revenue.
• Gross margin: : Reported gross margin, including one-time restructuring and other charges, was (85%). Adjusted gross margin, excluding one-time restructuring and other charges and inventory step-up costs, was 42% in Q4 2020, representing an increase of 1,100 bps from Q3 2020. Adjusted gross margin performance in Q4 2020 was positively impacted by higher facility utilization and growth in high margin international medical cannabis sales.
• Operating expenses: SG&A expenses in Q4 2020 increased 17% over Q3 2020 driven primarily by a combined $15 million increase in General & Administrative and Sales & Marketing expenses.
• Net Loss: Net loss of $1.3 billion in Q4 2020, primarily driven by impairment and restructuring charges, other impairment charges which were primarily identified during our annual impairment testing, and other non-cash fair value changes.
• Adjusted EBITDA: Adjusted EBITDA loss of $102 million in Q4 2020, a $5 million wider loss versus Q3 2020 driven by lower sales and higher operating expenses.
• Cash Position: Gross cash balance was $2.0 billion at March 31, 2020, down from $2.3 billion at the end of Q3 2020 reflecting the EBITDA loss, capital investments and mergers and acquisitions activities.
• Restructuring and Impairment Costs: In line with our previous announcement (March 4, 2020), we recorded a pre-tax restructuring and impairment charge of $743 million in Q4 2020, of which $28 million is estimated to be a cash charge. Additionally, we recorded impairment charges of $100 million Q4 2020, which were primarily identified during our annual impairment testing process.

Business & Operational Highlights

• COVID-19 response: Management has been closely monitoring the impact of COVID-19, with a focus on the health and safety of our employees, business continuity and supporting our communities. The majority of non-production related staff continue to work from home; we implemented daily screening process for production facility access; temporarily closed corporate-owned retail stores in mid-March but re-opened 20 stores with reduced hours as well as click & collect ordering; rolled out click & collect to 100% of all Tokyo Smoke and Tweed licensed stores and added same day delivery for Tokyo Smoke partner stores.
• UL certified Juju Power 510 battery as well as 510 vape cartridges under Tweed and Twd. brands, representing a total of five SKUs, are available in the Canadian recreational market.
• UL certified Tokyo Smoke Luma pod-based vape devices, Luma "Go" pods and Luma "Pause" pods are available in the Canadian recreational market.
• Ready to Drink ("RTD") beverages under Tweed and Houseplant brands, representing a total of three SKUs, are available in the Canadian recreational market.
• Company has expanded offering of Hemp-derived CBD products with the launch of a line of First & Free topical creams in select states in the US and the launch of This Works' line of clinically-proven CBD Booster skin products in the United Kingdom, Germany and select states in the US.
• On May 1, 2020, an indirect wholly-owned subsidiary of Constellation Brands (STZ) exercised warrants for approximately C$245 million , representing approximately 5.1% of our issued and outstanding common shares.

"Through the COVID-19 pandemic we have worked hard to ensure the health and well-being of our teams and customers and the continuity of our business. During this time, our team has rolled out our exciting new cannabis-infused beverages and vape products in Canada and a portfolio of CBD products in the US," shared CEO David Klein. "True to key priorities that I have outlined for Canopy, we have taken steps to align our capacity with the current market demand and focus our resources against the core markets with the largest and most tangible near-term profit opportunity."

Added Klein, "I am excited to implement our strategy reset and organization redesign over the course of fiscal 2021. We have a renewed strategic focus and a clear change agenda that is already underway. We are building what we believe is the best cannabis company in the world by putting the consumer at the heart of everything we do and are re-aligning our organization to be faster and more agile."

For earnings history and earnings-related data on Canopy Growth (CGC) click here.

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