Cannara Biotech, Inc. · TSX:LOVE
Cannara Biotech — Q2 2024 Earnings Presentation
46 slides from Cannara Biotech's earnings presentation, Feb 29, 2024
Slide 1: Premium-Grade Cannabis at Scale
TSXV: LOVE | OTCQB: LOVFF | FRA: 8CB0 PREMIUM-GRADE CANNABIS AT SCALE INVESTOR DECK Q2 FISCAL 2024 (AS OF February 29, 2024)
Slide 2: General Disclaimer
GENERAL DISCLAIMER This corporate presentation dated February 29, 2024 (the “Presentation”) has been prepared by management of Cannara Biotech Inc. (the “Company” or “Cannara”) and is based on public information. This Presentation does not constitute an offer to sell to any person, or a general offe
Slide 3: Forward-Looking Statement
FORWARD-LOOKING STATEMENT This presentation contains “forward-looking information” within the meaning of Canadian securities legislation. This information and these statements, referred to herein as “forward-looking statements” are made as of the date of this presentation or as of the date of the ef
Slide 4: Executive Summary
EXECUTIVE SUMMARY
Slide 5: Corporate Overview
CORPORATE OVERVIEW We are a vertically-integrated Canadian Licensed Producer of premium-grade cannabis and cannabis-derivative products • Canada’s fourth largest producer based on square footage. Two mega facilities based in Quebec, Canada spanning over 1.6 million square feet. • Currently serving c
Slide 6: Corporate Milestones
CORPORATE MILESTONES MARCH 2018 JANUARY 2019 FEBRUARY 2020 FEBRUARY 2021 JUNE 2021 OCTOBER 2021 AUGUST 2022 $ IDEA CAPITAL CULTIVATION QUEBEC RETAIL LAUNCH VALLEYFIELD OCS RETAIL EXOTIC GENETIX March 2018, idea is Cannara raises over Launches 170,000 sq Retail debut of its 3 ACQUISITION LAUNCH BRAND
Slide 7: Key Investor Considerations
KEY INVESTOR CONSIDERATIONS Well Capitalized, Fast-Growing Business Strategic Brand Portfolio • Trailing twelve-month revenue of $73.4M, gross profit of $30.8M, • Three flagship in-house brands. Adjusted EBITDA of $17.5M and Net income of $6.2M • Brand partnership with Exotic Genetix. • Increased pr
Slide 8: Operations
OPERATIONS
Slide 9: Farnham Facility
FARNHAM FACILITY FARNHAM, QUEBEC LEASED 150,000 sq. ft. 625,000 sq. ft. facility provides 170,000 sq. ft. of LEASED cannabis operation. 294,000 sq. ft. PHASE 1 Fully automated with biomonitoring sensors in every 170,000 sq. ft. 3,500 Kg grow room to ensuring optimal conditions and an increased plant
Slide 10: Valleyfield Facility
VALLEYFIELD FACILITY SALABERRY-DE-VALLEYFIELD, QUEBEC Acquired in June 2021, the facility occupies 1,033,506 sq. ft. on 3,000,000 sq. ft. of land. One of the largest indoor cannabis cultivation facilities in Canada and the largest in Quebec. Provides ability to expand output capacity to 100,000kg of
Slide 11: Valleyfield Facility Phases
VALLEYFIELD FACILITY SALABERRY-DE-VALLEYFIELD, QUEBEC PHASE 1 24 INDEPENDENT GROWING ZONES MEASURING 25,000 SQ.FT EACH 1,033,506 sq. ft. facility The completely automated facility is equipped with cutting edge technology including: : • 578,022 sq. ft. Main cultivation facility LED LIGHTING - FULLY B
Slide 12: The Principals of Our Success
THE PRINCIPALS OF OUR SUCCESS 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 Consumers become ambassadors Q2 FY 2024 | 12
Slide 13: Premium-Grade Cannabis at Scale
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 employs methods used in the most sophisticated markets in the world such as California; cultivated from: RARE GENETICS H
Slide 14: Exclusive US Brand Partnership in Canada
EXCLUSIVE US BRAND PARTNERSHIP IN CANADA 50 - Time US Award-Winning Seed Breeder EXOTIC GENETIX - Exclusive Canadian Partnership with CANNARA Cannara holds an exclusive license to use, market, sell, and distribute products branded by Exotic Genetix throughout Canada, in addition to its three flagshi
Slide 15: Accessibility
ACCESSIBILITY
Slide 16: Production Assets
PRODUCTION ASSETS CANNARA’S ESTIMATED ANNUAL PRODUCTION CAPACITY IN KG 80,000 kg 75,000 70,000 kg 60,000 kg 57,000 50,000 kg 45,000 40,000 kg 33,500 30,500 30,000 kg 22,000 20,000 kg 10,000 kg 0, kg FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 Q2 FY 2024 | 16
Slide 17: Why Quebec
WHY QUEBEC AVERAGE ELECTRICITY RATES BY PROVINCE IN CENTS PER KW HOUR 3.7¢/kWh CANNARA PREFERRED RATE Quebec has the lowest electricity rates in Canada (QC: 5.3¢/kWh vs. AB: 13.6¢/kWh). MB BC SK ON NS AB QC 5.3¢/kWh 5.9¢/kWh 7.7¢/kWh 8.9¢/kWh 9.8¢/kWh 11.4¢/kWh 13.6 ¢/kWh Quebec has the highest barr
Slide 18: Competitive Advantage
COMPETITIVE ADVANTAGE Focus on delivering premium “AAAA” quality cannabis at disruptive pricing Quality, Scalability and Transparency: • Deliver true to craft like procedures including hang drying and hand trimming cannabis to ensure quality. • Scalability of its premium-grade cannabis by growing in
Slide 19: Q2 FY 2024
Q2 FY 2024 | 20
Slide 20: Our Unique Value Proposition
OUR UNIQUE VALUE PROPOSITION Cannara is giving consumers what they want—premium quality cannabis at accessible, value-based pricing fit for frequent consumers and new entrants alike. The exceptional quality of our top-tier "AAAA" grade cannabis, along with our revolutionary low pricing, has led to a
Slide 21: Portfolio of Brands
PORTFOLIO OF BRANDS 132 ACTIVE SKUS AVAILABLE IN MARKET Our portfolio consists of three flagship brands – Tribal, Nugz, and Orchid CBD, all with distinctive identities and purpose, each filling a white space in Canada’s current cannabis market without compromising quality. All three brands offer pre
Slide 22: Tribal
Welcome to Tribal, Cannara’s house of genetics flagship brand. With a Canadian exclusive partnership with renowned US breeder Exotic Genetix, Tribal calls on consumers to enjoy the journey of new genetics across a variety of products, from dried flower and pre-rolls to full spectrum extracts and liv
Slide 23: Nugz
Nugz, your legacy dealer gone legal, has two staple flower offerings in addition to rotational offerings from Cannara’s grow houses and solventless concentrates. Flavour, potency, and premium quality bulk value are key attributes—when Nugz shows up its high-fives and good times all around! AVAILABLE
Slide 24: Orchid CBD
Orchid CBD is changing the perception of cannabis by being the better choice for consumers looking for premium, CBD-dominant and balanced cannabis products. When it comes to flower and pre-rolls, Orchid CBD offers CBD Runtz, a phenomenally well-rounded strain bred by Exotic Genetix. Our flower is ha
Slide 25: Market and Growth Strategy
MARKET and GROWTH STRATEGY
Slide 26: Canadian Recreational Cannabis Market
CANADIAN RECREATIONAL CANNABIS MARKET 2ND LARGEST LEGAL CANNABIS MARKET IN THE WORLD Monthly Retail Sales of Legal Cannabis Stores Legal Recreational Cannabis Market in Canada from October 2018 to December 2023 expected to reach $5.1B by 2029 (in million Canadian dollars) 466,99 446,71 439,29 451,82
Slide 27: Canadian Consumer Consumption of Cannabis is Growing
CANADIAN RECREATIONAL CANNABIS MARKET The Canadian Consumer Consumption of Cannabis is Growing AVERAGE REVENUE PER CONSUMER NUMBER OF CANADIAN RECREATION CONSUMERS AVG. REVENUE PER CONSUMER (in thousands USD) 1.60 4000.00 CONSUMERS in thousand Consumers 1.40 3500.00 1.20 3000.00 1.00 2500.00 0.80 20
Slide 28: 2024 Looking Ahead
2024 LOOKING AHEAD 1. INCREASE CANNABIS SUPPLY & FOCUS ON COST EFFICIENCIES In 2024, Cannara plans to remain vigilant by focusing on labor and cost efficiencies to continue to improve gross margins. This will provide resilience to Cannara’s platform in current market conditions with continued price
Slide 29: 1. Increase Cannabis Supply
1. INCREASE CANNABIS SUPPLY CANNABIS PRODUCTION & REVENUE GROWTH TRAJECTORY AS VALLEYFIELD PRODUCTION SCALES UP CANNABIS NET REVENUE IN $ MILLIONS CANNABIS PRODUCTION (TRIMMED BUDS) IN KG CANNABIS SOLD IN KG $20M $18.8 8000 kg $18.5 $18M $17.2 7000 kg $16M $14.9 6000 kg $14M $12.0 5000 kg $12M $11.1
Slide 30: 1. Focus on Labour and Cost Efficiencies
1. FOCUS ON LABOUR AND COST EFFICIENCIES COST EFFICIENCIES Cannara will continue to focus on cost efficiencies to improve its overall gross margin. In addition, as Cannara scales Its operations, economies of scale will be achieved, ultimately, improving gross margin in 2024. Gross Margin before FV C
Slide 31: 2. Innovation and Increased Product Offering
2. INNOVATION AND INCREASED PRODUCT OFFERING PRODUCT INNOVATION For 2024, the company is focused on innovation and new product development across all 3 of its flagship brands. Increased its total product portfolio from 97 in August 2023 to a total SKU count of 132 as of February 29, 2024. BC Cannara
Slide 32: 3. New Genetic Releases
3. NEW GENETIC RELEASES GELATO MINT CUBAN LINX TERPLE POWER SHERB 2 NEW GENETICS LAUNCHED Q1 2024: INDICA SATIVA HYBRID INDICA JIGGLERS AND DRIP STATION 2 NEW GENETICS RELEASING IN SPRING 2024: NEON SUNSHINE AND BUBBLE UP GALACTIC RUNTZ TRIPLE BURGER DRIP STATION JIGGLERS INDICA INDICA INDICA SATIVA
Slide 33: 4. Increase Market Share
4. INCREASE MARKET SHARE Estimated Cannara Market Share MARKET EXPANSION STRATEGY Q2 2024 & Q1 2024 Cannara has created lean and profitable operations, proven to Province Q2 2024 Q1 2024 % Change produce premium cannabis at scale and at competitive prices. QC 9.0% 8.7% 3.45% With the ability to prod
Slide 34: 5. Continued Adjusted EBITDA, Net Income, and Operating Cash Flows
5. CONTINUED ADJUSTED EBITDA, NET INCOME, AND OPERATING CASH FLOWS The Company’s financial strength shows through across all financial metrics. In 2024, Cannara expects to continue to substantially increase sales while focusing on labor and cost efficiencies resulting in an even stronger financial p
Slide 35: Q2 2024 Financials
cannara’” Q2 2024 FINANCIALS
Slide 36: Q2 2024 Selected Financial Highlights
Q2 2024 SELECTED FINANCIAL HIGHLIGHTS FOOTNOTES 4 1 Gross revenue included revenue from sale of goods, net of excise taxes, services revenue and lease revenues. Working capital is a non-GAAP financial measure. Negative working capital results from classifying the Company’s term loan as a 2 current l
Slide 37: Quarterly Detailed Highlights
QUARTERLY DETAILED HIGHLIGHTS February 29, November 30, August 31, May 31, February 28, November 30, August 31, May 31, 2024 2023 2023 2023 2023 2022 2022 2022 Current assets $ 58,224,875 $ 52,762,707 $ 51,695,836 $ 45,657,986 $ 40,820,665 $ 38,393,438 $ 40,988,684 $ 24,492,459 Non-current assets 87
Slide 38: Total Net Revenues by Quarter
TOTAL NET REVENUES BY QUARTER TOTAL NET REVENUES ANALYSIS BY QUARTER IN $ MILLIONS -- TOTAL NET REVENUE GROSS MARGIN 1 $19.7 $20M $19.5 $18.3 $18M $16M $15.9 $14M $13 $12 $12M $10.3 $10M $7.9 $8M $7.1 $6.9 $6.1 $6M $5M $4.8 $4.0 $4.0 $4M $3M $2M $1M 40% 39% 31% 38% 38% 41% 36% $0M Q4 Q1 Q2 Q3 Q4 Q1
Slide 39: Financial Ratios Comparison vs Peers
FINANCIAL RATIOS COMPARISON VS PEERS SIGNIFICANT GROWTH RATE WITH STRONG MARGINS RELATIVE TO PEERS Canopy Village Avant Tilray Aurora Organigram Cannara Decibel Rubicon Growth Farms Brands Market Cap in M 1874 1040 470 263 196 77 47 22 21 Revenue (LTM) in M 998 344 267 155 384 73 116 27 40 Revenue G
Slide 40: Leadership Team
LEADERSHIP TEAM
Slide 41: Executive Leadership Team
EXECUTIVE LEADERSHIP TEAM ZOHAR KRIVOROT NICHOLAS SOSIAK AVI KRIVOROT CHAIRMAN & CEO CFO CTO Zohar is an entrepreneur who has launched Nicholas is a CPA with an entrepreneurial spirit Avi has been in the information technology several successful businesses. He has founded, and passion for the Cannab
Slide 42: Executive Management Team
EXECUTIVE MANAGEMENT TEAM ISSAM BEN MOUSSA NOEMI FOLLAIN ANTHONY MANOUK VP PRODUCTION & EXPERIMENTATION VP FINANCE GM & VP COMPLIANCE Issam is an engineer in Agronomy & Noemi is a Chartered Professional Anthony is an accomplished business biotechnology and has a PhD in plant Accountant and have 8 ye
Slide 43: Executive Management Team Continued
EXECUTIVE MANAGEMENT TEAM CONTINUED BRIAN SHERMAN VP LEGAL AFFAIRS FRANCE LANDRY VP HUMAN RESOURCES Brian brings industry experience having served as a senior member of the legal France joins the Cannara team with over team at Canopy Growth, one of 17 years of experience in human Canada's most estab
Slide 44: Board of Directors
BOARD OF DIRECTORS ZOHAR KRIVOROT MARY DUROCHER CHAIRMAN & CEO DIRECTOR Mary has been involved in the cannabis industry since the Zohar is an entrepreneur who has launched several infancy of the Marihuana for Medical Purposes successful businesses. He has founded, advised and Regulations introductio
Slide 45: Positioned for National Success
IN SUMMARY Well capitalized, fast-growing business with an Operating with strong margins and with a established history of execution. focus on positive EBITDA, positive cash flow and organic growth through capital Offering customers the highest value reinvestment. products at disruptive low prices.
Slide 46: Thank You
TSXV: LOVE | OTCQB: LOVFF | FRA: 8CB0 THANK YOU www.cannara.ca investors.cannara.ca www.instagram.com/cannarabiotech www.facebook.com/cannarabiotech CANNARA HEADQUARTERS FARNHAM FACILITY VALLEYFIELD FACILITY 333 Decarie blvd, Suite 200 1144 Boulevard Magenta E 1175 Boulevard Gérard-Cadieux Saint-Lau