Canopy Growth Corporation · TSX:WEED
Canopy Growth — Q2 2021 Earnings Presentation
22 slides from Canopy Growth's earnings presentation, Nov 9, 2020
Slide 1: Canopy Growth Q2 2021 Earnings Presentation
CANOPY GROWTH Q2 2021 EARNINGS PRESENTATION November 9, 2020
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-U.S. 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 (loss) income, adjusted to exclude income tax recovery (expen
Slide 4: Today's Speakers
TODAY’S SPEAKERS David Klein Mike Lee CEO EVP & CFO 4
Slide 5: Agenda
AGENDA v Q2 2021 Key Takeaways v Progress Against Our Key Strategic Priorities v Q2 2021 Financial Results v Q&A 5
Slide 6: Q2 2021 Key Takeaways
Q2 2021 KEY TAKEAWAYS Momentum is building across our key businesses as our new strategy is coming to life • Strong growth and market share gains in our Canadian recreational business • Accelerating US growth by bringing our differentiated brands to market, and quickly expanding distribution • Maint
Slide 7: Improving Market Share in Canada
IMPROVING MARKET SHARE IN CANADA REC FLOWER2 17.3% 320 Bps BEVERAGES4 Canadian Rec1 54% 15.5% Value 200 REC Bps Flower3 13.7% 930 Bps 1. Weighted $ share of Canadian rec market, Bps improvement Q2 2021 over Q1 2021* 2. Weighted $ share of Canadian rec flower market, Bps improvement Q2 2021 over Q1 2
Slide 8: Accelerating US Growth
ACCELERATING US GROWTH Successfully launched BioSteel is rapidly Storz & Bickel Martha Stewart CBD expanding distribution for and Gummies, softgels, and oils in the US RTD beverages. This Works Signed distribution agreements with Reyes Gaining strength in the US Beer Division, Manhattan market throu
Slide 9: Build a Cannabis and Hemp Powerhouse in the US upon Permissibility
BUILD A CANNABIS AND HEMP POWERHOUSE IN THE US UPON PERMISSIBILITY Scalable Brands Constellation Brands Partnership • Bring our THC brands into the US • Balance sheet strength and access to market through MSO licensing or banking hemp-derived CBD extensions • Leverage Constellation’s powerful • Grow
Slide 10: Improving Quality and Execution
IMPROVING QUALITY AND EXECUTION • Flower quality improvement program is generating positive results • Initiatives underway to identify redundancies in production, and streamline quality assurance release program, to improve agility • Supply attainment consistently over 90% during Q2 21 • Opened 9 co
Slide 11: Tracking Our KPI
TRACKING OUR KPI Meeting or Exceeding Target Approaching Target Below Target § Our market share in the Canadian Q4 2020 Q1 2021 Q2 2021 recreational market grew by 200 bps in WIN WITH CONSUMER Q2 2021 vs Q1 2021 6 #1 or #2 Market Share in Canada § #1 Market share in Germany dried #1 or #2 Market Sha
Slide 12: Q2 2021 Financial Results
Q2 2021 FINANCIAL RESULTS CANOPY GROWTH TOKYO SMOKE ~~! Spectrum rT | Tigo e Therapeutics
Slide 13: Q2 2021 Key Financial Highlights
Q2 2021 KEY FINANCIAL HIGHLIGHTS Key Takeaways v Net revenue increased 77% year-over- (CDN in millions) Q2 21 Q2 20 vs. Q2 20 year, benefiting from favorable comparison, as Q2 2020 results included a Net Revenue $135.3 $76.6 77% $32.7 million charge for returns, return provisions and pricing allowan
Slide 14: Revenue Performance by Segment
REVENUE PERFORMANCE BY SEGMENT v Canadian rec revenue grew 12% YoY, adjusted for the charge, and 38% QoQ v Canadian medical net revenue increased 7% YoY, driven primarily by higher average order sizes v All other revenue increased by 60% on an organic basis, adjusting for the timing of the acquisiti
Slide 15: Revenue Performance by Format
Canadian Recreational Sales by Format – Q2 2021 REVENUE PERFORMANCE BY FORMAT Cannabis Oils & 2.0 10% Softgels v Flower and pre-roll sales grew in Canadian rec business in Q2 2021 versus Q1 2021 9% v 2.0 products accounted for 10% of Canadian rec, and 8% of Canadian B2B rec revenue v In medical, oil
Slide 16: Gross Margin Performance
GROSS MARGIN PERFORMANCE Quarterly Gross Margin Trend Drivers of Q2 2021 Gross Margin Performance 42% (-) Negative impact from under-absorption of fixed 31% 31% costs due to lower production output, as well as higher 5% 5% 6% 7% 19% 19% period costs Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 (-) Unfavorable busi
Slide 17: OpEx Trend
OPEX TREND Quarterly OpEx Trend (C$ in `000s) OpEx as a Percentage of Net Sales (Q2 2020 vs. Q2 2021) 300,000 Total OpEx Total OpEx Ex-SBC 140% Q2 20 Q2 21 250,000 120% 100% 200,000 80% 150,000 60% 100,000 40% 50,000 20% 0 0% Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 SALES AND R&D G&A SHARE-BASED D&A MARKETING
Slide 18: 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 20 Q3 20 Q4 20 Q1 21 Q2 21 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 $0 $0 -$20,000 -$50,000 -$40,000 -$100,000 -$150,000 -$60,000 -$200,000 -$80,000 -$250,000 -$100,000 -$300,000 -$350,000 -$120,000 -$4
Slide 19: Appendix
APPENDIX _ Ait CANOPY GROWTH ST Samos Spee, @ TOKYO SMOKE ste 7 Spectrum Therapeutics” 19
Slide 20: Adjusted EBITDA Reconciliation (Non-GAAP)
Adjusted EBITDA Reconciliation (Non-GAAP) 1 Adjusted EBITDA Reconciliation (Non-GAAP Measure) Three months ended September 30, (in thousands of Canadian dollars, unaudited) 2020 2019 Net (loss) income $ (96,552) $ 242,650 Income tax expense (recovery) 552 (5,767) Other (income) expense, net (221,256
Slide 21: Free Cash Flow (Non-GAAP) Reconciliation
Free Cash Flow (Non-GAAP) Reconciliation 1 Free Cash Flow Reconciliation Three months ended September 30, (in thousands of Canadian dollars, unaudited) 2020 2019 Net cash used in operating activities $ (161,749) $ (213,795) Purchases of and deposits on property, plant and equipment (28,648) (228,326
Slide 22: Thank You
THANK YOU _ hi CANOPY GROWTH ioc cs a Samos ay Spee, @ TOKYO SMOKE “1 Spectrum Therapeutics” 2