Canopy Growth loses $1.61mil­lion in Q2 2018

Stockwatch Daily - - CONSUMER GOODS - Mr. Bruce Lin­ton re­ports

CANOPY GROWTH Corp. has re­leased its con­sol­i­dated fi­nan­cial re­sults for the sec­ond quar­ter ended Sept. 30, 2017.

Sub­se­quent to quar­terend, Canopy Growth en­tered into a strate­gic re­la­tion­ship with For­tune 500 global bev­er­age leader Con­stel­la­tion Brands. As part of the agree­ment, an af­fil­i­ate of Con­stel­la­tion has in­vested ap­prox­i­mately $245-mil­lion in Canopy Growth in ex­change for 9.9-per-cent eq­uity in the com­pany and the par­ties have agreed to col­lab­o­rate on new

prod­uct devel­op­ment.

Sec­ond quar­ter 2018 high­lights

• Sec­ond quar­ter rev­enue was $17.6-mil­lion, a 107-per-cent in­crease over the sec­ond quar­ter ended Sept. 30, 2016;

• Sold 2,020 kilo­grams and kilo­gram equiv alents , a 73-per-cent in­crease over sec­ond quar­ter fis­cal 2017;

• The weighted av­er­age cost per gram be­fore ship­ping and ful­fil­ment was $1.25 per gram, com­pared with $1.70 per gram in the sec­ond quar­ter of fis­cal 2017;

• Ad­justed earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­za­tion in the sec­ond quar­ter of fis­cal 2018 amounted to a loss of $6.2-mil­lion, com­pared with an ad­justed EBITDA loss of $1.9-mil­lion in the com­par­a­tive quar­ter last year;

• Net loss in the sec­ond quar­ter of fis­cal 2018 of $1.6-mil­lion, or one cent per ba­sic and di­luted share, com­pared with net earn­ings of $5.4-mil­lion, or five cents per ba­sic and di­luted share, in the sec­ond quar­ter of fis­cal 2017; In­ven­tory at Sept. 30, 2017, amounted to $73.8-mil­lion and bi­o­log­i­cal as­sets amounted to $23. 5-mil­lion, to­gether to­talling $97.3-mil­lion;

• On Sept. 21, 2017, Canopy Growth an­nounced that it had es­tab­lished a bind­ing strate­gic part­ner­ship in the Dan­ish mar­ket;

• On Sept. 11, 2017, the com­pany and its wholly owned sub­sidiary Spek­trum Cannabis GmbH an­nounced a sup­ply li­cence agree­ment with Spain’s Al­cal­iber SA;

• On Sept. 8, 2017, the com­pany an­nounced con­struc­tion of a new 212,000square-foot green­house and the pur­chase of a neigh­bour­ing 450,000square-foot green­house in Ni­a­gara-on-the-Lake, Ont.;

• $108.2-mil­lion in cash and cash equiv­a­lents at quar­ter-end, prior to the in­fu­sion of ap­prox­i­mately $245-mil­lion from the Con­stel­la­tion in­vest­ment that closed on Nov. 2, 2017. Sub­se­quent to sec­ond quar­ter 2018

• On Oct. 11, 2017, en­tered into a de­fin­i­tive joint ven­ture agree­ment with a green­house op­er­a­tor to de­velop 1.3 mil­lion square feet of green­house grow­ing ca­pac­ity in Bri­tish Columbia with an op­tion for an ad­di­tional 1.7-mil­lion-square-foot green­house also in B.C.; • On Oct. 25, 2017, launched a strate­gic part­ner­ship in the Ja­maican cannabis mar­ket.

(See WEED Ta­ble 1 on page 43)

“With our ob­jec­tive to win and re­tain sig­nif­i­cant fu­ture mar­ket share, and backed by the re­cent $245-mil­lion in­vest­ment from Con­stel­la­tion, we re­main fo­cused on the ex­pan­sion of our cul­ti­va­tion ca­pac­ity, ex­trac­tion plat­form and fin­ished branded prod­ucts pro­grams,” said Bruce Lin­ton, chair­man and chief ex­ec­u­tive of­fi­cer. “The his­toric cannabis sup­ply MOU that we signed dur­ing the sec­ond quar­ter with the prov­ince of New Brunswick con­firmed our long-held be­lief that in­vest­ment in brands, qual­ity and scale cou­pled with in­vest­ing in the peo­ple and com­mu­ni­ties we be­lieve in across Canada would leave us well po­si­tioned to serve pro­vin­cial sup­ply needs. We are hope­ful to see more and more prov­inces make sim­i­lar de­ci­sions to pur­sue the most re­li­able, var­ied and high-qual­ity prod­ucts avail­able in the sec­tor.

“Start­ing with the 27 pro­vi­sional patents that have been filed to date, our re­search af­fil­i­ate Canopy Health In­no­va­tions seeks to de­fine the break­through cannabis-based med­i­cal ther­a­pies that we could com­mer­cial­ize glob­ally. Our re­la­tion­ship with Con­stel­la­tion and the com­mit­ment to work to­gether to de­velop and mar­ket reg­u­lated recre­ational cannabis-based bev­er­ages, when and where they are fed­er­ally le­gal, is a crit­i­cal step in our move up the value chain . ... With in­vest­ments and ca­pac­ity off­take agree­ments in place with qual­ity do­mes­tic pro­duc­tion as­sets and sev­eral oth­ers in ne­go­ti­a­tion, our Canopy Rivers sub­sidiary is an­a­lyz­ing global in­vest­ment op­por­tu­ni­ties, an­other re­flec­tion of the grow­ing in­ter­na­tional scope of our busi­ness.”

We seek Safe Har­bor.

Karen Bax­ter con­densed this news re­lease (karenb@stock­watch.com).

John K Bell, Barry Fish­man, Mur­ray Gold­man, Bruce Lin­ton, An­drew M W Moffat, Larry Poirier, Christo­pher James Sch­narr

(WEED) Shares: 190,252,975

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