Canopy Growth Reports Fourth Quarter and Fiscal Year 2021 Financial Results

Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (NASDAQ: CGC) today announces its financial results for the fourth quarter and Fiscal Year 2021 ended March 31, 2021.  All financial information in this press release is reported in Canadian dollars, unless otherwise indicated. 

“During Fiscal 2021, Canopy Growth transformed into a CPG-modelled organization, reinforcing a foundation for sustained growth and long-term success. By leveraging consumer insights and innovation to deliver best-in-class products, Canopy Growth is positioned to achieve our goal of unleashing the power of cannabis to improve lives,” said David Klein, CEO, Canopy Growth. “We are starting to see strong momentum across all of our key businesses and remain firmly focused on capitalizing on U.S. opportunities in Fiscal 2022.”

“We made tremendous progress improving our supply chain and right-sizing our manufacturing footprint, bringing supply and demand into balance,” added Mike Lee, CFO. “Our cost savings program is on track to deliver $150-$200 million of savings within the next 18 months, and we remain committed to our path to profitability by the end of Fiscal 2022, while continuing to invest in an organization that is focused on insights, innovation and gaining momentum in the U.S. market.” 

1 Unless otherwise indicated, market share data disclosed in this press release is calculated using the Company’s internal proprietary market share tool that utilizes point of sales data supplied by a third-party data provider, government agencies and our own retail store operations across the country.  Tool captures point of sale data from an average of 29% of stores in Alberta, British Columbia, Saskatchewan, Manitoba and Newfoundland & Labrador, point of sale data from 100% of stores in New Brunswick, Nova Scotia and Prince Edward Island, as well as depletions and ecommerce sales data from the OCS.

Fourth Quarter and Full Year Fiscal 2021 Corporate Financial Highlights

  • Revenues: Net revenue of $148 million in Q4 2021 was an increase of 38% versus Q4 2020. Net revenue increased 37% during FY 2021 over the prior year driven by double-digit growth across Canadian cannabis, international cannabis and other consumer products businesses. Total net cannabis revenue of $101 million in Q4 2021 and $379 million in FY 2021, represented an increase of 27% and 28% over Q4 2020 and the prior year, respectively. 
  • Gross margin: Reported gross margin in Q4 2021 was 7% as compared to negative 85% in Q4 2020. Adjusted gross margin, excluding $10.3 million in restructuring charges recorded in cost of goods sold, was 14% compared to 42% in Q4 2020 and was negatively impacted by lower production output, an unfavorable product mix in the Canadian recreational market and inventory charges in part due to the write-down of certain packaging inventory ahead of a transition to new cannabis packaging, partially offset by payroll subsidies received from the Canadian government in Q4 2021, pursuant to a COVID-19 relief program. FY 2021 reported gross margin was 12% compared to negative 8% in FY 2020. Adjusted gross margin, excluding $26 million in restructuring charges recorded in cost of goods sold, was 17% in FY 2021 versus 26% in FY 2020 and was impacted by lower production output and an unfavorable product mix, partially offset by payroll subsidies received from the Canadian government in FY 2021, pursuant to a COVID-19 relief program. 
  • Operating expenses: Total SG&A (“SG&A”) expenses in Q4 2021 declined by 25% versus Q4 2020, driven by year-over-year reductions in Sales & Marketing, and Research and Development (“R&D”) expenses. SG&A expenses declined by 17% in FY 2021 compared to FY 2020 driven by a 20% reduction in Sales & Marketing, a 22% reduction in General & Administrative (“G&A”) and a 7% reduction in R&D expenses. Share-based compensation expenses decreased 76% over Q4 2020 and 72% over FY 2020. 
  • Net Loss: Net loss in Q4 2021 of $617 million, a $710 million narrower loss versus Q4 2020, was driven primarily by Other Expense totalling $367 million during Q4 2021 attributable to non-cash fair value changes of $292 millionand impairment and restructuring charges of $75 million primarily related to changes to our Canadian operations that were announced on December 9, 2020. The reported FY 2021 net loss of $1.7 billion, a $283 million wider loss versus FY 2020, was driven primarily by the year-over-year change in other income (expense), net, the reduction in the income tax recovery, and expected credit losses on financial assets and related charges, and partially offset by the year-over-year improvement in gross margin and reductions in selling, general and administrative expenses, share-based compensation expense, and asset impairment and restructuring charges. 
  • Adjusted EBITDA: Adjusted EBITDA loss in Q4 2021 was $94 million in Q4 2021, a $8 million narrower loss versus Q4 2020 driven by higher sales and lower operating expenses. The FY 2021 Adjusted EBITDA loss of $340 million, a $102 million narrower loss versus FY 2020 driven by higher sales and lower operating expenses. 
  • Cash Position: Cash and Short-term Investments amounted to $2.3 billion at March 31, 2021, representing an increase of $0.3 billion from $1.98 billion at March 31, 2020 reflecting net proceeds from a $930 million (US$750 million) senior secured term loan announced on March 18, 2021, partially offset by EBITDA losses and capital investments. 
Adjusted gross margin is a non-GAAP measure, and for Q4 2021 excludes restructuring costs of $10.3 million recorded in cost of goods sold (Q4 2020 – excludes (i) restructuring and other charges of $132.1 million related to the impact of restructuring actions; and (ii) $4.7 million related to the flow-through of inventory step-up associated with fiscal 2020 business combinations). See “Non-GAAP Measures”.
3 Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures”.
Free cash flow is a non-GAAP measure. See “Non-GAAP Measures”.
5 Adjusted gross margin is a non-GAAP measure, and for Fiscal 2021 excludes restructuring costs of $26.0 million recorded in cost of goods sold, and $1.5 million related to the flow-through of inventory step-up associated with Fiscal 2020 business combinations (Fiscal 2020 – excludes charges of $136.8 million, as described above). See “Non-GAAP Measures”.

Fourth Quarter and Fiscal Year 2021 Business & Operational Highlights

  • Canopy Growth continues to build momentum across its key product lines in Canada: 
    • In Flower, the Company maintained #1 market share in the total flower category in Canadian recreational market during Q4 2021, capturing over 19% share of the market. Twd. exited FY 2021 as the #1 flower brand in Canada, with the brand capturing 6 out of top 10 SKUs. During Q4 2021, the Company’s premium flower brands combined to capture a leading 10.9% share of the premium flower segment in Canada. The Company launched its first Quebec-exclusive brand, Vert, supported by multiple Quebec-grown strains, Green Cush and Sour Kush, and Tweed lineage-strain named flower products in Ontario during Q4 2021. 
    • In Vapes, the Company strengthened its positioning in the Canadian vape market with the transition to 0.5 ml 510 cartridges during Q4 2021. The addition of Ace Valley vape products to the Company’s portfolio allows Canopy to immediately capture the #3 market share for vapes in Canada and the #1 market share for all-in-one vapes in Q4 FY 2021. 
    • In Beverages, The Company launched a portfolio of THC beverages in the Canadian recreational cannabis market during FY 2021, capturing 35% dollar share of the total beverage category during the full year. Canopy Growth launched Quatreau CBD beverages in Canada in Q3 2021 and captured #1 market share in Canadasince launch. In Q1 2022, Canopy has expanded its portfolio of THC beverages with Tweed Iced Tea beverages (available in lemon and raspberry flavors, both with 5 mg THC) now shipping. 
    • In Edibles, the Company launched Twd. Strawberry gummies in Ontario in Q4 2021 with nationwide distribution rolling out in Q1 2022. 
    • The acquisition of Ace Valley and the planned acquisition of Supreme Cannabis are expected to solidify Canopy’s leadership in the Canadian recreational market, with the pro-forma market share of 18.1 % in Q4 2021, based on Canopy’s internal market share data.
  • The U.S. business poised for significant growth with a strong foundation in place for both CBD and non-CBD products 
    • Canopy successfully launched a range of Martha Stewart health and wellness CBD products in the U.S., including gummies, softgels and oils, in FY 2021. Martha Stewart CBD products are already a top 9 brand among all CBD supplements in the food, drug and convenience-store channel, according to IRI data for the 4 weeks ended April 18, 2021. 
    • The Company launched Quatreau CBD beverages in the U.S. in Q4 2021 and became the first U.S. CBD beverage brand to sign with a major beverage distributor, Southern Glazer’s Wine & Spirit. 
    • BioSteel is gaining momentum in the U.S. market, leveraging the U.S. distribution agreements for its ready–to-drink (RTD) sports beverages. BioSteel RTD beverages are already a top-7 sports drink brand with only 3.6% ACV, according to the IRI data for the 13 weeks ended May 16, 2021. 
    • Storz & Bickel (S&B) vaporizer products concluded a strong year with 67% revenue growth year over year driven by expanded distribution and a strong consumer pull. 
  • Company on track to achieve positive Adjusted EBITDA during the second half of FY 2022 and strengthened balance sheet provides additional fuel for growth 
    • Implementation of supply chain optimization well underway with network optimization and complexity reduction initiatives expected to realize our previously stated cost savings of $150 million to $200 million by the end of the first half of FY 2023. 
    • Right-sizing of our Canadian production footprint has improved cannabis supply and demand with the equivalent kilograms of cannabis sold in Q4 2021 exceeding kilograms harvested by over 40%. 
    • Overall Inventory levels declined sequentially in Q4 2021 even as finished inventory increased in support of various new product launches. 
    • Canopy strengthened its balance sheet by securing a US$750 million senior secured term loan, with an ability to raise an additional $500 million in debt.

Fourth Quarter and Fiscal Year 2021 Financial and Operational Review 

Revenue by Channel

This table has been recast to align with our new segment reporting. International and other revenue includes revenue from our international medical business and hemp-derived CBD business. Other consumer products includes revenue from Storz & Bickel, This Works, BioSteel, clinics, accessories and other ancillary businesses.
Reflects excise taxes of $17.5 million and other revenue adjustments of $3.1 million for Q4 2021 (Q4 2020 – $5.8 million and $5.4 million, respectively), and excise taxes of $54.9 million and other revenue adjustments of $14.0 million for FY2021 (FY2020 – $35.6 million and $51.5 million, respectively). 
7 Reflects excise taxes of $1.4 million for Q4 2021 (Q4 2020 – $1.3 million), and excise taxes of $5.6 million for FY2021 (FY2020 – $5.2 million). 

Revenue by Form

Canadian Cannabis  

  • Recreational B2B net sales in Q4 2021 increased 40% over prior year period due primarily to growth in the retail store network in Canada over the fiscal year and growth in value flower and sales of ingestible cannabis, cannabis extracts and cannabis topical products. 
  • Recreational B2C net sales in Q4 2021 increased 37% versus Q4 2020 due primarily to growth in flower sales, the availability of vape, beverage and edible products and a higher number of corporate owned stores. The number of corporate owned stores increased over the comparison period by 11 to 33. 
  • Canadian medical net revenue in Q4 2021 increased 1% from Q4 2020 driven primarily by a higher average order value in Q4 2021. 

International Cannabis

  • C3 revenue in Q4 2021 declined 2% year-over-year in part due to COVID-19 restrictions that have limited sales activities. 
  • Other revenue in Q4 2021 increased 84% over the prior year period due to primarily to growth in U.S. CBD sales. 
8 Excludes the impact of other revenue adjustments. 
9 Other revenue adjustments represent the Company’s determination of returns and pricing adjustments and relate to the Canadian recreational business-to-business channel. 

Other Consumer Products

  • S&B vaporizer revenue in Q4 2021 increased 52% over Q4 2020, benefitting from strengthened distribution in the U.S., strong consumer demand and a broader product portfolio. 
  • This Works sales in Q4 2021 increased 2% over Q4 2020, benefitting from organic growth driven by e–commerce sales and sales of the Stress Check hand sanitizer launched in the UK and U.S. during fiscal 2021. 
  • Other revenue in Q4 2021 increased 149% year-over-year due primarily to increased BioSteel sales in the U.S. that benefited from expanded distribution. 

Subsequent to Quarter-end

  • Entered into a definitive agreement to acquire 100% of The Supreme Cannabis Company, Inc. (“Supreme Cannabis”), a transaction that combines Canopy’s preeminent position with Supreme Cannabis’ Top-10 position in Canada to create a pro forma Canadian recreational market share of 13.6%[10], including the 7ACRES brand holding Canada’s number one premium flower brand position and Top-5 in pre-rolled joints[11]. Completion of the acquisition of Supreme transaction is subject to approval by Supreme Cannabis shareholders as well as certain court and regulatory approvals. 
  • Acquired AV Cannabis Inc. (“Ace Valley”), a leading Cannabis brand in Ontario with a strong focus on ready-to-enjoy (“RTE”) products and a loyal following of millennial and Gen-Z consumers, with the intent of leveraging the Canopy Growth’s best-in-class national sales, marketing and distribution capabilities to expand the product portfolio and scale the brand across Canada.

    The fourth quarter fiscal 2021, fourth quarter fiscal 2020, fiscal year 2021 and fiscal year 2020 financial results presented in this press release have been prepared in accordance with U.S. GAAP. 

Webcast and Conference Call Information

The Company will host a conference call and audio webcast with David Klein, CEO and Mike Lee, CFO at 10:00 AM Eastern Time on June 1, 2021. 

Webcast Information

A live audio webcast will be available at:

Replay Information

A replay will be accessible by webcast until 11:59 PM ET on August 30, 2021 at:
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