Canopy Growth Corporation · TSX:WEED
Canopy Growth — Q2 FY2023 Earnings Presentation
22 slides from Canopy Growth's earnings presentation, Nov 9, 2022
Slide 1: Canopy Growth Q2 FY2023 Earnings Presentation
CANOPY GROWTH Q2 FY2023 EARNINGS PRESENTATION November 9, 2022
Slide 2: Disclaimers and Cautionary Statements
DISCLAIMERS AND CAUTIONARY STATEMENTS Forward-Looking Information This presentation contains “forward-looking statements” and “forward-looking information” within the meaning of applicable U.S. and Canadian securities laws (collectively, “forward-looking statements”) which involve certain known and
Slide 3: Participants in the solicitation
Participants in the solicitation Canopy Growth and its directors and executive officers may be deemed participants in the solicitation of proxies from Canopy Growth shareholders with respect to an amendment to the Company’s Articles of Incorporation (the “Amendment”) to facilitate Canopy USA’s (as d
Slide 4: Non-GAAP Measures
NON-GAAP MEASURES Adjusted EBITDA is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted EBITDA is calculated as the reported net income (loss), adjusted to exclude income tax recovery (expense);
Slide 5: Today's Speakers
TODAY’S SPEAKERS DAVID KLEIN JUDY HONG CEO CFO 5
Slide 6: Agenda
AGENDA • Key Takeaways • Canopy USA – Transforming our U.S. THC Strategy • Progress Against Key Priorities • Q2 FY2023 Financial Results Review • Q&A • Unless otherwise indicated, all financial information in this presentation is reported in Canadian dollars. • Unless otherwise indicated, market sha
Slide 7: Key Takeaways
KEY TAKEAWAYS announced a comprehensive plan to fast track entrance into the U.S. THC market and create a North American cannabis CPG powerhouse • New U.S. domiciled holding company, Canopy USA, LLC (“Canopy USA”), has been assigned ownership of U.S. cannabis investments. • Canopy Growth on track fo
Slide 8: Progress against Premiumization strategy
Progress against Premiumization strategy • New premium flower SKUS launched year-to-date (“YTD”) • New premium flower SKUS shipped under the 7ACRES brand FY2023 under the Doja brand included OG Deluxe, Funky year-to-date (“YTD”) FY2023 include Lemon Zktlz, Purple Zktlz and Ultra Sour. Holiday offeri
Slide 9: Progress against Premiumization strategy
Progress against Premiumization strategy • Launched multiple new Tweed branded flower strains including Tiger • Launched range of new Vert branded flower strains including QC Cake, Wedding Cake, Kush Mints and Lemon Kush YTD in FY2023. Limite Blue Iguana, East Coast Ultra Bud, Tiger Cake, CBD OG Kus
Slide 10: Record BioSteel revenue in Q2 FY2023
record BIOSTEEL revenue in Q2 FY2023 • BioSteel Q2 FY2023 revenue almost quadrupled versus the prior year driven by higher distribution of the brand’s RTD hydration drinks. • Ready-to-Drink (“RTD”) all-commodity volume (“ACV”) increased to 34% in Q2 FY20231 up from 6.5% in Q2 FY2022 • Completed load
Slide 11: Q2 FY2023 Financial Results
Q2 FY2023 FINANCIAL RESULTS 11
Slide 12: Q2 FY2023 Key Financial Highlights
Q2 FY2023 KEY FINANCIAL HIGHLIGHTS vs. (CDN in millions) Q2 FY2023 Q2 FY2022 Q2 FY2022 • Net Revenue decreased 10% primarily due to the Net Revenue $117.9 $131.4 (10)% divestiture of C3. When adjusting for both the impact of C3 and the impact of our Canadian retail cannabis Adjusted Gross Margin 10%
Slide 13: Revenue Performance by Channel
REVENUE PERFORMANCE BY CHANNEL vs. (in millions of Canadian dollars, unaudited) Q2 FY2023 Q2 FY2022 Q2 FY2022 Canadian Recreational Cannabis Net Revenue Business-to-business1 $25.3 $41.9 (40)% Business-to-consumer $12.8 $16.7 (23)% $38.1 $58.6 (35)% Canadian Medical Cannabis Net Revenue2 $14.2 $13.1
Slide 14: Segmented Revenue and Gross Margin
SEGMENTED REVENUE AND GROSS MARGIN vs. (in millions of Canadian dollars, unaudited) Q2 FY2023 Q2 FY2022 Q2 FY2022 Canada Cannabis Segment Net revenue $52.3 $71.7 (27%) Gross margin percentage, as reported (15%) (128%) 113pp Adjusted gross margin percentage (15%) (124%) 109pp Rest-of-World Cannabis S
Slide 15: Gross Margin Performance
Gross Margin performance Quarterly Gross Margin Trend Drivers of Q2 FY2023 Gross Margin Performance (+) Lower inventory write-downs, as Q2 FY2022 included $87MM primarily Reported Gross Margins Adjusted Gross Margins relating to excess Canadian cannabis inventory resulting from lower sales relative
Slide 16: Opex Trend
Opex Trend OpEx as a Percentage of Net Sales Quarterly OpEx Trend (C$ in 000s) (Q2 FY2022 vs. Q2 FY2023) 160,000 Total OpEx Total OpEx Ex-SBC 60% Q2 FY 2022 Q2 FY 2023 140,000 50% 120,000 40% 100,000 80,000 30% 60,000 20% 40,000 10% 20,000 0 0% Q2 FY2022 Q3 FY2022 Q4 FY2022 Q1 FY2023 Q2 FY2023 SALES
Slide 17: Adjusted EBITDA and Free Cash Flow
ADJUSTED EBITDA AND FREE CASH FLOW Adjusted EBITDA Trend (C$ in 000s) Free Cash Flow Trend (C$ in 000s) Q2 FY2022 Q3 FY2022 Q4 FY2022 Q1 FY2023 Q2 FY2023 Q2 FY2022 Q3 FY2022 Q4 FY2022 Q1 FY2023 Q2 FY2023 $0 $0 -$20,000 -$20,000 -$40,000 -$40,000 -$60,000 -$60,000 -$80,000 -$80,000 -$100,000 -$100,00
Slide 18: Appendix
Appendix 18
Slide 19: Adjusted Gross Margin (Non-GAAP) Reconciliation
ADJUSTED GROSS MARGIN 1 (NON-GAAP) RECONCILIATION 19
Slide 20: Adjusted EBITDA (Non-GAAP) Reconciliation
ADJUSTED EBITDA 1 (NON-GAAP) RECONCILIATION 20
Slide 21: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW 1 (NON-GAAP) RECONCILIATION 21
Slide 22: Thank you
Thank you 22