Canopy Growth Corporation · TSX:WEED
Canopy Growth — Q2 FY2022 Earnings Presentation
28 slides from Canopy Growth's earnings presentation, Nov 5, 2021
Slide 1: Canopy Growth Q2 FY2022 Earnings Presentation
CANOPY GROWTH Q2 FY2022 EARNINGS PRESENTATION November 5, 2021
Slide 2: Disclaimers and Cautionary Statements
DISCLAIMERS AND CAUTIONARY STATEMENTS 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 unknown risks and uncertain
Slide 3: 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 4: Today's Speakers
TODAY’S SPEAKERS DAVID KLEIN MIKE LEE CEO EVP & CFO 4
Slide 5: Agenda
AGENDA ! Key Takeaways ! Progress Against Our Key Strategic Priorities ! Q2 FY2022 Financial Results Review ! Q&A ! All financial information in this presentation is reported in Canadian dollars, unless otherwise indicated. ! Unless otherwise indicated, market share data disclosed in this presentati
Slide 6: Key Takeaways
KEY TAKEAWAYS Progress against our key strategic priorities continues despite near-term headwinds ! Maintained market leadership in premium flower category and increased share in vapes and edibles in Canadian recreational cannabis market during Q2 FY2022 ! Several R&D-driven, innovative new product
Slide 7: Agreement To Acquire Wana Brands Upon U.S. Federal Permissibility
Agreement To Acquire Wana Brands Upon U.S. Federal Permissibility COMPANY ! Largest market is Colorado, with significant presence in 11 other states as well, plus partnership in Canada (Indiva) ! Leverages partner infrastructure through CMO relationships across all additional states – expects to be
Slide 8: Wana Transaction Strengthens Canopy Growth's U.S. Ecosystem
WANA TRANSACTION Strengthens CANOPY GROWTH’s U.S. ECOSYSTEM light licensing model and Colorado operations1 Extends ecosystem to additional THC legal states through Wana’s asset-light = Acreage Holdings2 = TerrAscend2 = Wana Brands 1. Map includes Wana’s forecasted license expansion in 2021 2. As of
Slide 9: The U.S. is a Core Pillar of Our Growth Strategy
THE U.S. IS a core pillar of our growth strategy Q2 FY2022 Net Revenue1 U.S. accounted for 14% of total sales Canada 61% 15% in Q2 FY2022, up United 41% States 14% CBD 48% year-over- Germany 37% Other 17% year 8% & Others 7% 1. Based on location of legal entities 9
Slide 10: New Product Launches Are Hitting the Market
New product launches are hitting the market In Market Now In Market Soon Over 40 SKUs across key product categories 10
Slide 11: Flower & Pre-roll Joints
FLOWER & Pre-roll joints ! Maintained #1 market share in premium flower category in Q2 FY2022 with 13.2% , and #2 market share in the value flower category in Q2 FY2022 with 18.1% ! Launched a range of premium flower SKUs including new DOJA Okanagan Grown Ultra Sour and Cold Creek Kush, as well as D
Slide 12: Vape & Concentrates
VAPE & Concentrates VA ! Increased vape market share in Canadian rec market by 20 bps to 8.5% in Q2 FY2022, from Q1 FY2022 ! Launched whisl, an innovative CBD vape designed for mood management, through an Circle-K in the U.S. exclusive partnership with Circle ! whisl is now available on shopcanopy.c
Slide 13: Beverages & Edibles
BEVERAGES & Edibles ! Increased market share in Canadian rec market in edibles by 50 bps quarter-over-quarter to 8.7% ! Launched new Tweed Fizz beverages in Watermelon and Mango flavors, both with 5mg THC ! Expanded the popular Deep Space beverage brand with the recently shipped Deep Space Limon Spl
Slide 14: BioSteel
BIOSTEEL ! BioSteel sales increased 47% in Q2 FY2022 versus Q2 FY2021 driven by the launch of RTD beverages and expanded distribution in the U.S. Market ! BioSteel RTD beverages achieved All Commodity Volume (“ACV“) in the U.S. of 6.5%1 ! BioSteel has recently secured new distribution with a number
Slide 15: Outlook
outlook Pushing out positive Adjusted EBITDA target due to market share challenges in the Canadian recreational business and a slower-than-expected ramp-up of U.S. distribution ! Focused on stabilizing Canada recreational market share in the 2H FY2022 ! Key catalysts include increased supply of in-d
Slide 16: Q2 FY2022 Financial Results
Q2 FY2022 FINANCIAL RESULTS 16
Slide 17: Tracking Our KPI
Tracking Our KPI Meeting or Exceeding Target Approaching Target Below Target Q3 Q4 Q1 Q2 FY2021 FY2021 FY2022 FY2022 WIN WITH CONSUMER ! Maintained market leadership in #1 or #2 Market Share in Canada premium flower category6 #1 or #2 Market Share in U.S. #1 or #2 Market Share in Germany ! Gross mar
Slide 18: Q2 FY2022 Key Financial Highlights
Q2 FY2022 KEY FINANCIAL HIGHLIGHTS vs. (CDN in millions) Q2 FY2022 Q2 FY2021 Q2 FY2021 • Q2 FY2022 Net Revenue Net Revenue $131.4 $135.3 (3%) decreased 3% year-over-year (YoY) • Adjusted EBITDA loss widened by Adjusted Gross Margin (52%) 19% (7,100 bps) 90% due to lower sales and declines in Gross M
Slide 19: Revenue Performance by Segment
REVENUE PERFORMANCE BY SEGMENT vs. (in millions of Canadian dollars, unaudited) Q2 FY2022 Q2 FY2021 Q2 FY2021 Canadian Recreational Cannabis Net Revenue Business to Business1 $41.9 $42.2 (1%) Business to Consumer $16.7 $18.7 (11%) $58.6 $60.9 (4%) Canadian Medical Cannabis Net Revenue2 $13.1 $13.9 (
Slide 20: Revenue Performance by Form
REVENUE PERFORMANCE BY FORM vs. (in millions of Canadian dollars, unaudited) Q2 FY2022 Q2 FY2021 Q2 FY2021 Canadian Recreational Cannabis Dry Bud1 $56.8 $63.9 (11%) Oils and Softgels1 $5.5 $7.0 (21%) Beverages, Edibles, Topicals, and Vapes1 $9.2 $8.0 15% Other Revenue Adjustments2 $- ($3.8) 100% Exc
Slide 21: Gross Margin Performance
Gross Margin performance Quarterly Gross Margin Trend Drivers of Q2 FY2022 Gross Margin Performance (-) Inventory write-downs in Q2 FY22 amounted to $87 million and primarily relate to Reported Gross Margins Adjusted Gross Margins excess Canadian cannabis inventory resulting from lower sales relativ
Slide 22: Opex Trend
Opex Trend OpEx as a Percentage of Net Sales Quarterly OpEx Trend (C$ in `000s) (Q2 FY2021 vs. Q2 FY2022) 180,000 Total OpEx Total OpEx Ex-SBC 60% Q2 FY2021 Q2 FY2022 160,000 50% 140,000 120,000 40% 100,000 30% 80,000 60,000 20% 40,000 10% 20,000 0 0% Q2 FY2021 Q3 FY2021 Q4 FY2021 Q1 FY2022 Q2 FY202
Slide 23: 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 FY2021 Q3 FY2021 Q4 FY2021 Q1 FY2022 Q2 FY2022 Q2 FY2021 Q3 FY2021 Q4 FY2021 Q1 FY2022 Q2 FY2022 $0 $0 -$20,000 -$20,000 -$40,000 -$40,000 -$60,000 -$60,000 -$80,000 -$80,000 -$100,000 -$100,
Slide 24: Appendix
Appendix 24
Slide 25: Adjusted Gross Margin (Non-GAAP) Reconciliation
ADJUSTED GROSS MARGIN (NON-GAAP) RECONCILIATION !"#$%&'"()*+%%(,-*./0! 1'2+02/3/-&/+0(45+06)!!7(,'-%$*'8 "#$%%!&'()#*!%(+%+!,%-)%&.%$!/01 !"#$%&'()*#+)$',$-*#*+"*#$+'..*/)$01203%$4&0/0$"#+"2*%0+5$(#*(+"%0+6 2023 2020 4%)!$%5%(6% 73/31/89 73/:12;; <$'**!&=$>?(1!=*!$%-'$)%+ @831390A 2;10B0 C+D6*)&%()*
Slide 26: Adjusted EBITDA (Non-GAAP) Reconciliation
ADJUSTED EBITDA (NON-GAAP) RECONCILIATION !"#$%&'"()*+,-!! .'/01/2324&201(560178!!9(:'4%$;'< "#$%%!&'()#*!%(+%+!,%-)%&.%$!/01 !"#$%&'()*#+)$',$-*#*+"*#$+'..*/)0$(#*(+"%1+2 2023 2020 4%)!5'** 67381//39 67:81;;29 <(='&%!)>?!7$%='@%$A9!%?-%(*% 7/120B9 ;;2 C)#%$!7D(='&%9!%?-%(*%1!(%) 73:;1E239 722312;89
Slide 27: Free Cash Flow (Non-GAAP) Reconciliation
FREE CASH FLOW (NON-GAAP) RECONCILIATION !"##$%&'($!)*+$,#-*.-/)/&0/*.! "#$%%!&'()#*!%(+%+!,%-)%&.%$!/01 !"#$%&'()*#+)$',$-*#*+"*#$+'..*/)0$(#*(+"%1+2 2023 2020 4%)!56*#!7*%+!8(!'-%$6)8(9!65)8:8)8%* ;<=>1?@>A ;<3@31BC?A D7$5#6*%*!'E!6(+!+%-'*8)*!'(!-$'-%$)F1!-G6()!6(+!%H78-&%() <3>1/B?A <2=1@C=A I$%
Slide 28: Thank you
Thank you 28