Cannara Biotech, Inc. · TSX:LOVE
Cannara Biotech — Q2 2022 Earnings Presentation
36 slides from Cannara Biotech's earnings presentation, May 2022
Slide 1: Premium-Grade Cannabis at Scale
PUBLISHED MAY 2022 PREMIUM-GRADE CANNABIS AT SCALE Vertically integrated Canadian Licensed Producer of premium- grade cannabis and cannabis-derivative products with two mega facilities based in Quebec spanning over 1.6 million square feet INVESTOR DECK Q2 FISCAL 2022 (AS AT FEBRUARY 28, 2022) MARKET
Slide 2: Overview
OVERVIEW FORWARD-LOOKING STATEMENT 3 WHY INVEST IN CANNARA 6 OUR CORE BELIEF SYSTEM 7 QUALITY 8 ACCESSIBILITY 14 BRAND CULTURE 17 LOOKING AHEAD 22 EXECUTIVE TEAM 33 BOARD OF DIRECTORS 35 CONTACT 36 PREMIUM CANNABIS AT SCALE 2
Slide 3: General Disclaimer
GENERAL DISCLAIMER This c o rp o ra te p re se nta tio n d a te d M a y 1 0 , 2 0 2 2 ( the “ P re se nta tio n” ) ha s b e e n p re p a re d b y m a na g e m e nt o f C a nna ra B io te c h Inc . ( the “ C o m p a ny” o r “ C a nna ra ” ) a nd is b a se d o n p u b lic info rm a tio n. This P re se
Slide 4: Forward-Looking Statement
FORWARD-LOOKING STATEMENT This p re se nta tio n c o nta ins “ fo rw a rd -lo o k ing info rm a tio n” w ithin the m e a ning o f C a na d ia n se c u ritie s le g isla tio n. This info rm a tio n a nd the se sta te m e nts, re fe rre d to he re in a s “ fo rw a rd -lo o k ing sta te m e nts” a re m
Slide 5: See Our True Colors
SEE OUR TRUE COLORS PLAY VIDEO 5
Slide 6: Why Cannara?
WHY CANNARA? 1 HIGH VALUE PROPOSITION 4 STRONG GROWTH POTENTIAL Our value proposition to consumers is We own two Quebec-based mega among the highest in the market. We facilities spanning over 1,650,000 sq. ft., WE’RE JUST GETTING offer some of the highest quality “AAAA” providing the Company with 12
Slide 7: Our Core Belief System
QUALITY ACCESSIBILITY BRAND CULTURE PREMIUM “AAAA” CANNABIS DISRUPTIVE LOW PRICING GRASSROOT BRAND CULTURE HANG DRIED, SLOW CURED ALIGNED WITH LEGACY MARKET TRANSPARENCY AT SCALE IDEAL FOR YOUR EVERYDAY CONSUMERS BECOME CONSUMERS AMBASSADORS OUR CORE BELIEF SYSTEM 7
Slide 8: Quality
QUALITY PREMIUM-GRADE CANNABIS AT SCALE Delivering a premium quality product is at the heart of our ethos, resulting in high cannabinoid content and rich flavourful cannabis. Our cannabis is indoor grown, employing methods used in the most sophisticated markets in the world such as California; culti
Slide 9: Farnham Facility
FARNHAM FACILITY FARNHAM FACILITY FARNHAM, QUEBEC 9
Slide 10: Farnham Facility
FARNHAM FACILITY INDOOR FACILITY - TOTAL CONTROL IRRIGATION LIGHTING NUTRIENTS HUMIDITY TEMPERATURE FULL AUTOMATION Cannara has built one of the largest indoor cannabis cultivation facilities in Canada and the largest in Quebec. Located in Farnham, our 625,000 sq. ft. facility provides 170,000 sq. f
Slide 11: Valleyfield Facility
VALLEYFIELD FACILITY VALLEYFIELD FACILITY SALABERRY-DE-VALLEYFIELD, QUEBEC 1 81
Slide 12: Valleyfield Facility
VALLEYFIELD FACILITY 24 INDEPENDENT GROWING ZONES MEASURING 25,000 SQ.FT EACH LED LIGHTING FULLY BLACKED-OUT ROOF AUTOMATED TABLES FULL CONTROL OVER TEMPERATURE AND HUMIDITY Located in Valleyfield, Quebec, the newly-built facility occupies 1,033,506 sq. ft. on 3,000,000 sq. ft. of land and provides
Slide 13: Valleyfield First Grow
VALLEYFIELD FIRST GROW PLAY VIDEO 13
Slide 14: Accessibility: Our Unique Value Proposition
ACCESSIBILITY OUR UNIQUE VALUE PROPOSITION Cannara is giving consumers what they want—premium quality at accessible, value-based pricing fit for frequent cannabis consumers and new entrants alike. Our “AAAA” quality cannabis and disruptive low pricing have resulted in high demand for our products. I
Slide 15: Why We Chose to Be Built in Quebec
AVERAGE ELECTRICITY RATES BY PROVINCE IN CENTS PER KW HOUR 11.3¢/kWh WHY WE CHOSE TO BE BUILT 10.7¢/kWh 9.7¢/kWh 8.9¢/kWh IN QUEBEC? 7.8¢/kWh 5.5¢/kWh 4.2¢/kWh • Quebec has the lowest electricity rates in Canada QC MB BC SK AB NS ON ( Cannara’s rate) (QC: 4.2¢/kWh vs. ONT: 11.3¢/kWh) • Quebec has th
Slide 16: Our Unique Value Proposition
OUR UNIQUE VALUE PROPOSITION CANNARA PRICING STRATEGY PRICE – QUALITY MATRIX HIGH SKIMMING PREMIUM PRICE CANNARA’S UNIQUE SELLING PROPOSITION Cannara is filling a whitespace LOW in today’s cannabis landscape LOW COST PENETRATION CANNARA by offering premium “AAAA” quality at accessible “value- based”
Slide 17: Brand Culture: Our Portfolio of Brands
BRAND CULTURE OUR PORTFOLIO OF BRANDS Our portfolio consists of three flagship brands with distinctive identity and purpose, each filling a white space in Canada’s current cannabis market without compromising quality. All three brands offer premium-grade cannabis, hang- dried and slow cured to prese
Slide 18: Tribal Brand Story
BRAND STORY Tribal delivers uncompromised premium-grade cannabis to consumers who have a deep relationship with cannabis. From pheno-hunting rare genetics to unfolding each strain’s lineage and flavor profiles, Tribal is a journey not a destination. POSITIONING Tribal appeals to those who have an af
Slide 19: Nugz Brand Story
BRAND STORY Nugz is a cult-worthy movement committed to abundance, quality and value. Nugz offers a disruptive product line designed for long-time consumers who have a sharp sense for product quality on the lookout for better value. POSITIONING Nugz is a brand created for frequent cannabis users who
Slide 20: Orchid CBD Brand Story
BRAND STORY Orchid CBD is a wellness brand dedicated to providing rare strains CBD-dominant, terpene-rich, trichome covered, oversized dried flowers that deliver softer blissful experiences with no compromise on quality and flavours. POSITIONING Orchid CBD is a CBD-dominant brand of cannabis that ov
Slide 21: Notable Achievements
NOTABLE ACHIEVEMENTS Q2 2022 AND SUBSEQUENT TO QUARTER HIGHLIGHTS Milestones promised, milestones delivered. JAN – APR 2022 From January to April, a new growing zone of 25,000 sq. ft. has been activated each month. Cannara is a fast-paced moving company that At the end of April, 4 growing zones were
Slide 22: Looking Ahead FY 2022
LOOKING AHEAD FY 2022 Cannara is consistently monitoring growth opportunities that support its commitment to continue to report positive adjusted EBITDA. The company expects to allocate resources to existing and new initiatives over the course of the next fiscal year which include 5 key activities:
Slide 23: 2022 Activities
2022 ACTIVITIES Cannara expects to activate 6 of its 25,000 square foot cultivation zones in its Valleyfield facility by August 1. INCREASE CANNABIS SUPPLY 2022. As at April 2022, Cannara has activated 4 of its 6 planned zones, achieving 66% of its annual objective and is currently actively operatin
Slide 24: Increase Cannabis Supply: Production Asset Square Footage
INCREASE CANNABIS SUPPLY CANADIAN PRODUCERS - PRODUCTION ASSET SQUARE FOOTAGE CANNARA’S ESTIMATERD PRODUCTION CAPACITY IN KG Village Farms 2,200,000 sf 30,000 kg Aphria/Tilray 2,150,000 sf Cannara 1,650,000 sf 25,000 kg Canopy Growth 1,514,000 sf HEXO 1,300,000 sf 20,000 kg Auxly 1,127,000 sf Aurora
Slide 25: Production Capacity Forecast
INCREASE CANNABIS SUPPLY CANNABIS PRODUCTION & REVENUE GROWTH TRAJECTORY AS VALLEYFIELD PRODUCTION SCALE UP CANNABIS NET REVENUE IN $ MILLIONS AND KG CANNABIS PRODUCTION (TRIMMED BUDS) IN KG $10M 16000 kg $9M 14000 kg $8M 12000 kg $7M 2,870 KG 10000 kg $5.8 1,710 KG $6M 1,700 KG 1,350 KG $5.4 $5.3 $
Slide 26: Increase Market Share
INCREASE MARKET SHARE RELEASED RELEASED FY 2023 GELATO MINT CUBAN LINX TERPLE POWER SHERB GALACTIC RUNTZ INDICA SATIVA HYBRID INDICA INDICA THC THC THC THC THC 21% - 27% 23% - 29% 21% - 27% 23% - 29% 23% - 29% TERPENES TERPENES TERPENES TERPENES TERPENES 2 NEW GENETICS FOR FY 2022 4% - 6% 3% - 5% 3%
Slide 27: Marketing Strategy & Roll Out Plan
INCREASE MARKET SHARE MARKET EXPANSION STRATEGY Now that we have established over 1.6 million sq. ft. of production assets in Quebec with access to the lowest cost of electricity and preferential labor rate in the country—the two largest cannabis costs input—Cannara has created a lean and profitable
Slide 28: Continued Positive Adjusted EBITDA
CONTINUED POSITIVE ADJUSTED EBITDA Since its retail launch in the prior year, Cannara has reported continued positive adjusted EBITDA for the last four quarters while expanding its operations significantly in 2022. The past two quarters with the start of the cultivation activities at the Valleyfield
Slide 29: Selected Financial Highlights
SELECTED FINANCIAL HIGHLIGHTS Q2 2022 FINANCIAL OUTLOOK TRAILING TWELVE MONTH CUMULATIVE REVENUES Cash $8.3M $29,000,000 Current assets $22.7M Current debt $7.9M $24,000,000 Working capital1 $14.8M $19,000,000 Total assets $102M Net assets $62.5M $14,000,000 Quarterly revenue $7.4M $9,000,000 Cannab
Slide 30: Total Net Revenues by Quarter
TOTAL NET REVENUES BY QUARTER TOTAL NET REVENUES ANALYSIS BY QUARTER IN $ MILLIONS 1 $8M T OT A L N E T RE V E N U E S GROS S M A RGIN $7.4 $7.2 $7M $6.5 $6.6 $6M $5M $4M $3.5 $3.4 $3.0 $3M $2.6 $2.3 $2M FINANCIAL HIGHLIGHTS 49% 53% 46% 36% $1.4 $1.3 $1M $0.5 58% 36% $0M Q1 Q2 Q3 Q4 Q1 Q2 2021 2021
Slide 31: Q2 2022 Detailed Financial Highlights
Q2 2022 DETAILED FINANCIAL HIGHLIGHTS FOOTNOTES 1 Gross revenue included revenue from sale of goods, net of excise taxes, services revenue and lease revenues. 2 Gross profit before fair value adjustments % is determined as Gross profit before fair value FINANCIAL HIGHLIGHTS adjustments divided by To
Slide 32: Quarterly Detailed Financial Highlights
QUARTERLY DETAILED FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS 1 Adjusted EBITDA is a non-GAAP financial performance measures. A reconciliation of this measure is presented in the MD&A available on www.sedar.com. 2 Gross profit before fair value adjustments % is determined as Gross profit before fair
Slide 33: Executive Leadership Team
EXECUTIVE LEADERSHIP TEAM ZOHAR KRIVOROT NICOLAS SOSIAK AVI KRIVOROT CHAIRMAN & CEO CFO CTO Zohar is an entrepreneur who has launched several Nicholas is a CPA with an entrepreneurial spirit and passion Avi has been in the information technology industry for successful businesses. He has founded, ad
Slide 34: Executive Management Team
EXECUTIVE MANAGEMENT TEAM NOEMI FOLLAIN ANTHONY MANOUK VP FINANCE GENERAL MANAGER & VP COMPLIANCE Noemi is a Chartered Professional Accountant and have 8 years of Anthony is an accomplished business leader specializing in audit experience in small to large-size public and private companies pharmaceu
Slide 35: Board of Directors
BOARD OF DIRECTORS ZOHAR KRIVOROT DONALD OLDS CHAIRMAN & CEO LEAD DIRECTOR & CHAIRMAN OF THE AUDIT COMMITTEE Zohar is an entrepreneur who has launched several successful businesses. He has founded, Donald Olds is an experienced life sciences executive, entrepreneur and director with significant advi
Slide 36: Contact Us
CONTACT US WE WOULD LOVE TO HEAR FROM YOU MARKETS HQ TSXV: LOVE.V CANNARA HEADQUARTERS OTCQB: LOVFF 333 Decarie blvd, Suite 200 NICHOLAS SOSIAK FRA: 8CB Saint-Laurent, QC, H4N 3M9 CFO (514) 543 – 4200 x 254 FARNHAM FACILITY VALLEYFIELD FACILITY nick@cannara.ca 1144 Boulevard Magenta E 1175 Boulevard