Le Lézard
Classified in: Health, Business, Covid-19 virus
Subjects: ERN, MAT

Canopy Growth Reports Full Year and 4th Quarter Fiscal 2020 Financial Results; Provides Strategic Review Update


Generated Net Revenue of $399 million in FY 2020, up 76% over FY 2019 

In connection with previously announced organizational and strategic review, recorded impairment and restructuring charges of $743 million; the majority of which are non-cash charges

Gross Margin of (85)% in Q4 FY2020; excluding restructuring and other charges, achieved Adjusted Gross Margin of 42%

Net Loss of $1.3 billion; Adjusted EBITDA loss of $102 million in Q4 2020

SMITHS FALLS, Ontario, May 29, 2020 /PRNewswire/ -- Canopy Growth Corporation ("Canopy Growth" or the "Company") (TSX: WEED) (NYSE: CGC) today announced its financial results for the fourth quarter and full twelve-month fiscal year ended March 31, 2020. The Company is also sharing details of its new strategic plan aimed at winning in priority markets and categories and executing a path to profitability.  All financial information in this press release is reported in millions of Canadian dollars, unless otherwise indicated. The fourth quarter and full twelve-month fiscal year 2020 financial results presented in this press release have been prepared in accordance with U.S. GAAP. 

"Through the COVID-19 pandemic we have worked hard to ensure the health and well-being of our teams and customers and the continuity of our business.  During this time, our team has rolled out our exciting new cannabis-infused beverages and vape products in Canada and a portfolio of CBD products in the US," shared CEO David Klein. "True to key priorities that I have outlined for Canopy, we have taken steps to align our capacity with the current market demand and focus our resources against the core markets with the largest and most tangible near-term profit opportunity."

Added Klein, "I am excited to implement our strategy reset and organization redesign over the course of fiscal 2021.  We have a renewed strategic focus and a clear change agenda that is already underway. We are building what we believe is the best cannabis company in the world by putting the consumer at the heart of everything we do and are re-aligning our organization to be faster and more agile."

Strategic and Organizational Update

Canopy Growth's overall strategy is to unleash the full potential of cannabis, capture sizable market share in focus categories and markets and execute a path to profitability to build sustainable, long-term shareholder value.

The Company no longer strives to be the first to every market, but strives to the best and become a leading consumer insights and product development company in select priority markets, that matches products and consumer preferences in the cannabis space. To achieve this, Canopy Growth will focus on:

Canopy Growth expects Fiscal 2021 to be a transition year as the Company resets its strategic focus, rolls out a new organizational design, and implements a comprehensive operational and supply chain productivity program. Given this, as well as the significant COVID-19 related uncertainties that exist, the Company is withdrawing its previously communicated milestones for achieving positive Adjusted EBITDA and Net Income.  Depending on the impacts of COVID-19, Canopy Growth may provide new metrics by which to measure the Company's performance in the second half of fiscal 2021.

Fourth Quarter Fiscal 2020 Financial Summary









Net revenue

Gross margin
percentage

Adjusted
gross margin
percentage1

Net loss

Adjusted
EBITDA2

Free cash
flow3

Reported

$107.9

(85%)

42%

$(1,326.4)

$(102.0)

$(304.7)

vs. Q3 2020

(13%)

NM

1,100 bps

(1110%)

(5%)

15%

vs. Q4 2019

15%

NM

2,000 bps

(282%)

(8%)

22%

 

Fiscal Year 2020 Financial Summary









Net revenue

Gross margin
percentage

Adjusted
gross margin
percentage4

Net loss

Adjusted
EBITDA2

Free cash
flow3

Reported

$398.8

(8%)

26%

$(1,387.4)

$(442.8)

$(1,477.6)

vs. Fiscal 2019

76%

(2,000) bps

1,400 bps

(95%)

(53%)

(25%)


1 Adjusted gross margin is a non-GAAP measure, and for 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".

2 Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures".

3 Free cash flow is a non-GAAP measure. See "Non-GAAP Measures".

4 Adjusted gross margin is a non-GAAP measure, and for fiscal 2020 excludes charges of $136.8 million incurred in Q4 2020, as described in footnote 1 above. See "Non-GAAP Measures".

Fourth Quarter Fiscal 2020 Corporate Financial Highlights

Business & Operational Highlights

 

Fourth Quarter and Fiscal Year 2020 Financial and Operational Review







(in millions of Canadian dollars, unaudited)

Q4 2020

vs. Q3 2020

vs. Q4 2019

FY2020

vs. FY2019

Canadian recreational revenue






- Business to business

$36.7

(31%)

(36%)

$157.3

34%

- Business to consumer

$13.1

(14%)

12%

$52.0

125%

Canadian recreational revenue

$49.8

(28%)

(28%)

$209.3

49%

Canadian medical revenue

$14.9

1%

29%

$56.8

(17%)

International medical revenue

$20.7

11%

1051%

$68.0

574%

All other revenue

$29.7

(11%)

23%

$105.5

210%

Excise taxes

$(7.2)

(39%)

(42%)

$(40.8)

51%

Net revenue

$107.9

(13%)

15%

$398.8

76%







(in millions of Canadian dollars, unaudited)

Q4 2020

vs. Q3 2020

vs. Q4 2019

FY2020

vs. FY2019

Canadian recreational revenue






- Dry bud1

$48.9

(29%)

51%

$238.1

188%

- Oils, softgels and Cannabis 2.0 products2

$6.3

34%

(83%)

$22.7

-61%

- Other revenue adjustments3

$(5.4)

2%

NM

$(51.5)

NM

Global medical revenue






- Dry bud

$9.8

7%

34%

$35.8

-30%

- Oils and softgels

$25.8

6%

329%

$89.0

224%

All other revenue

$29.7

(11%)

23%

$105.5

210%

Excise taxes4

$(7.2)

(39%)

(42%)

$(40.8)

51%

Net revenue

$107.9

(13%)

15%

$398.8

76%


1 Excludes the impact of other revenue adjustments.

2 Cannabis 2.0 products include cannabis-infused chocolates, cannabis-infused beverages, and cannabis vape products (including power sources such as rechargeable and compact batteries, ready-to-go vape pens, and cartridges/vape pods)

3 Other revenue adjustments represent the Company's determination of returns and pricing adjustments, and relate to the Canadian recreational business-to-business channel.

4 Excise taxes is presented net of the impact from other revenue adjustments.

Canadian Cannabis  

International Cannabis

Strategic Acquisitions

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 May 29, 2020.

Webcast Information
A live audio webcast will be available at:
https://produceredition.webcasts.com/starthere.jsp?ei=1308617&tp_key=850fd370f4

Replay Information
A replay of the call will be accessible by webcast, until 11:59 PM ET on August 27, 2020, at
https://produceredition.webcasts.com/starthere.jsp?ei=1308617&tp_key=850fd370f4

U.S. GAAP Financial Reporting

Effective April 1, 2020, Canopy Growth is considered a U.S. domestic issuer and is required to prepare financial statements in compliance with U.S. GAAP. Accordingly, our consolidated audited financial statements for the year ended March 31, 2020, including all comparative figures, have been restated in accordance with these standards.

As part of this transition, Canopy Growth will also be required to provide an auditor attestation report under Section 404(b) of the Sarbanes-Oxley Act in connection with its Annual Report on Form 10-K to be filed with the Securities and Exchange Commission ("SEC").

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 loss, adjusted to exclude income tax recovery (expense), other income (expense), net, and loss on equity method investments, share-based compensation expense, depreciation and amortization expense, asset impairment and restructuring costs, restructuring and other charges recorded in cost of goods sold, and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition-related costs. The Adjusted EBITDA reconciliation is presented within this news release and explained in the Company's Annual Report on Form 10-K to be filed with the SEC. 

Adjusted Gross Margin 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 Gross Margin is calculated as gross margin excluding restructuring and other charges recorded in cost of goods sold and charges related to the flow-through of inventory step-up associated with business combinations. The Adjusted Gross Margin reconciliation is presented within this news release. 

Free Cash Flow 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.  This measure is calculated as net cash provided by (used in) operating activities less purchases of and deposits on property, plant and equipment. The Free Cash Flow reconciliation is presented within this news release and explained in the Company's Annual Report on Form 10-K to be filed with the SEC. 

The following schedules are provided in this news release:

Exemption for Filing of Restated Interim Financial Reports

As of April 1, 2020, the Company is considered  an "SEC issuer" as defined under National Instrument 51-102 ? Continuous Disclosure Obligations ("NI-51-102") and must file restated interim financial reports prepared in accordance with the generally accepted accounting principles in the United States that the SEC has identified as having substantial authoritative support, as supplemented by Regulation S-X and Regulation S-B under the 1934 Act ("U.S. GAAP") for the interim periods since its most recently completed financial year for which annual financial statements have been filed (the "Restated Interim Financial Reports") on or before the deadline for the Company to file its audited annual financial statements for the year ended March 31, 2020, being June 1, 2020.

The Company is relying on an exemption granted by the Ontario Securities Commission to provide the Company with an additional 45 days from the deadline otherwise applicable under NI 51-102. As such, the Company will be filing its Restated Interim Financial Reports and related MD&A prepared in accordance with U.S. GAAP on or before July 16, 2020. The Company confirms that its management and other insiders are subject to our Insider Trading Policy which contains an insider trading black-out policy that reflects the principles in Section 9 of National Policy 11-207 ? Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions.

About Canopy Growth Corporation
Canopy Growth (TSX:WEED, NYSE:CGC) is a world-leading diversified cannabis, hemp and cannabis device company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms, as well as medical devices through the Company's subsidiary, Storz & Bickel GMbH & Co. KG. From product and process innovation to market execution, Canopy Growth is driven by a passion for leadership and a commitment to building a world-class cannabis company one product, site and country at a time. The Company has operations in over a dozen countries across five continents.

The Company's medical division, Spectrum Therapeutics is proudly dedicated to educating healthcare practitioners, conducting robust clinical research, and furthering the public's understanding of cannabis, and has devoted millions of dollars toward cutting edge, commercializable research and IP development. Spectrum Therapeutics sells a range of full-spectrum products using its colour-coded classification Spectrum system as well as single cannabinoid Dronabinol under the brand Bionorica Ethics.

The Company operates retail stores across Canada under its award-winning Tweed and Tokyo Smoke banners. Tweed is a globally recognized cannabis brand which has built a large and loyal following by focusing on quality products and meaningful customer relationships.

From our public listing on the Toronto Stock Exchange and New York Stock Exchange to our continued international expansion, pride in advancing shareholder value through leadership is engrained in all we do at Canopy Growth. Canopy Growth has established partnerships with leading sector names including cannabis icons Snoop Dogg and Seth Rogen, breeding legends DNA Genetics and Green House Seeds, and Fortune 500 alcohol leader Constellation Brands, to name but a few. Canopy Growth operates eleven licensed cannabis production sites with over 5.2 million square feet of production capacity, including over one million square feet of GMP certified production space. For more information visit www.canopygrowth.com

Notice Regarding Forward Looking Statements
This press release contains "forward-looking statements" within the meaning of applicable securities laws, which involve certain known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as "intend," "goal," "strategy," "estimate," "expect," "project," "projections," "forecasts," "plans," "seeks," "anticipates," "potential," "proposed," "will," "should," "could," "would," "may," "likely," "designed to," "foreseeable future," "believe," "scheduled" and other similar expressions. Our actual results or outcomes may differ materially from those anticipated. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

Forward-looking statements include, but are not limited to, statements with respect to:

Certain of the forward-looking statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.

The forward-looking statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including: (i) management's perceptions of historical trends, current conditions and expected future developments; (ii) our ability to generate cash flow from operations; (iii) general economic, financial market, regulatory and political conditions in which we operate; (iv) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (v) consumer interest in our products; (vi) competition; (vii) anticipated and unanticipated costs; (viii) government regulation of our activities and products including but not limited to the areas of taxation and environmental protection; (ix) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; (x) our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xi) our ability to conduct operations in a safe, efficient and effective manner; (xii) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; (xiii) our ability to continue to operate in light of the COVID-19 pandemic and the impact of the pandemic on demand for, and sales of, our products and our distribution channels; and (xiv) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.

By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release and other reports we file with, or furnish to, the Securities and Exchange Commission (the "SEC") and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, the risk that the COVID-19 pandemic may disrupt our operations and those of our suppliers and distribution channels and negatively impact the use of our products; consumer demand for cannabis and U.S. hemp products; that cost savings and any other synergies from the CBI Group Investments may not be fully realized or may take longer to realize than expected; future levels of revenues; our ability to manage disruptions in credit markets or changes to our credit rating; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; business strategies, growth opportunities and expected investment; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); the potential effects of judicial or other proceedings on our business, financial condition, results of operations and cash flows; volatility in and/or degradation of general economic, market, industry or business conditions; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis and U.S. hemp products in vaping devices; the anticipated effects of actions of third parties such as competitors, activist investors or federal, state, provincial, territorial or local regulatory authorities, self-regulatory organizations, plaintiffs in litigation or persons threatening litigation; changes in regulatory requirements in relation to our business and products; and the factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended March 31, 2020 to be filed with the SEC. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.

Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management's current expectations and plans relating to the future, and the reader is cautioned that the forward-looking statements may not be appropriate for any other purpose. While we believe that the assumptions and expectations reflected in the forward-looking statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-looking statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by law. The forward-looking statements contained in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements.

Schedule 1


CANOPY GROWTH CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands of Canadian dollars, except number of shares, unaudited)








March 31,

2020


March 31,

2019

ASSETS

Current assets:





Cash and cash equivalents

$

1,303,176

$

2,480,830

Short-term investments


673,323


2,034,133

Restricted short-term investments


21,539


21,432

Amounts receivable, net


90,155


106,974

Inventory


391,086


190,072

Prepaid expenses and other assets


85,094


85,691

Total current assets


2,564,373


4,919,132

Equity method investments


65,843


112,385

Other financial assets


249,253


363,427

Property, plant and equipment


1,524,803


1,096,340

Intangible assets


476,366


558,070

Goodwill


1,954,471


1,489,859

Other assets


22,636


25,902

Total assets

$

6,857,745

$

8,565,115






LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:





Accounts payable

$

123,393

$

188,920

Other accrued expenses and liabilities


64,994


37,613

Current portion of long-term debt


16,393


103,716

Other liabilities


215,809


81,414

Total current liabilities


420,589


411,663

Long-term debt


449,022


842,259

Deferred income tax liabilities


47,113


105,081

Liability arising from Acreage Arrangement


250,000


-

Warrant derivative liability


322,491


-

Other liabilities


190,660


134,004

Total liabilities


1,679,875


1,493,007

Commitments and contingencies





Redeemable noncontrolling interest


69,750


6,400

Canopy Growth Corporation shareholders' equity:





Common shares - $nil par value; Authorized - unlimited number of shares;
Issued - 350,112,927 shares and 337,510,408 shares, respectively


6,373,544


6,029,222

Additional paid-in capital


2,615,155


1,592,024

Accumulated other comprehensive income (loss)


220,899


(5,905)

Deficit


(4,323,236)


(835,118)

Total Canopy Growth Corporation shareholders' equity


4,886,362


6,780,223

Noncontrolling interests


221,758


285,485

Total shareholders' equity


5,108,120


7,065,708

Total liabilities and shareholders' equity

$

6,857,745

$

8,565,115

 

Schedule 2


CANOPY GROWTH CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of Canadian dollars, except number of shares and per share data, unaudited)







Years ended March 31,



2020


2019

Revenue

$

439,626

$

253,431

Excise taxes


40,854


27,090

Net revenue


398,772


226,341

Cost of goods sold


430,456


198,096

Gross margin


(31,684)


28,245

Operating expenses:





Selling, general and administrative expenses


693,737


392,250

Share-based compensation


320,276


273,447

Asset impairment and restructuring costs


623,266


-

Total operating expenses


1,637,279


665,697

Operating loss


(1,668,963)


(637,452)

Loss from equity method investments


(64,420)


(10,752)

Other income (expense), net


224,329


(59,709)

Loss before income taxes


(1,509,054)


(707,913)

Income tax recovery (expense)


121,614


(4,112)

Net loss


(1,387,440)


(712,025)

Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interest


(66,114)


24,256

Net loss attributable to Canopy Growth Corporation

$

(1,321,326)

$

(736,281)






Basic and diluted loss per share


$(3.80)


$(2.76)

Basic and diluted weighted average common shares outstanding


348,038,163


266,997,406

 

Schedule 3


CANOPY GROWTH CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of Canadian dollars, except number of shares and per share data, unaudited)







Three months ended March 31,



2020


2019

Revenue

$

115,068

$

106,485

Excise taxes


7,155


12,435

Net revenue


107,913


94,050

Cost of goods sold


199,738


73,005

Gross margin


(91,825)


21,045

Operating expenses:





Selling, general and administrative expenses


197,579


153,064

Share-based compensation


78,354


90,614

Asset impairment and restructuring costs


623,266


-

Total operating expenses


899,199


243,678

Operating loss


(991,024)


(222,633)

Loss from equity method investments


(57,752)


(1,731)

Other income (expense), net


(376,295)


(114,251)

Loss before income taxes


(1,425,071)


(338,615)

Income tax recovery (expense)


98,666


(8,877)

Net loss


(1,326,405)


(347,492)

Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interest


(23,384)


32,024

Net loss attributable to Canopy Growth Corporation

$

(1,303,021)

$

(379,516)






Basic and diluted loss per share

$

(3.72)

$

(1.10)

Basic and diluted weighted average common shares outstanding


349,837,102


343,877,591

 


Schedule 4


CANOPY GROWTH CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of Canadian dollars, unaudited)







Years ended March 31,



2020


2019

Cash flows from operating activities:





Net loss

$

(1,387,440)

$

(712,025)

Adjustments to reconcile net loss to net cash used in operating activities:





Depreciation of property, plant and equipment


73,716


30,062

Amortization of intangible assets


51,297


16,856

Share of loss on equity method investments


64,420


10,752

Share-based compensation


320,276


278,228

Asset impairment and restructuring costs


623,266


-

Income tax (expense) recovery


(121,614)


4,112

Non-cash foreign currency


(2,012)


(18,776)

Interest paid


(25,472)


(14,521)

Change in operating assets and liabilities, net of effects from purchases of businesses:





Amounts receivable


20,979


(67,688)

Prepaid expenses and other assets


(26,917)


(87,476)

Inventory


(177,091)


(144,917)

Accounts payable and accrued liabilities


(20,750)


69,540

Other, including non-cash fair value adjustments


(165,293)


100,822

Net cash used in operating activities


(772,635)


(535,031)

Cash flows from investing activities:





Purchases of and deposits on property, plant and equipment


(704,944)


(644,456)

Purchases of intangible assets


(16,957)


(74,359)

Redemption (purchases) of short-term investments


1,427,482


(2,029,812)

Proceeds on assets classified as held for sale


-


-

Investments in equity method investments


(5,135)


(36,896)

Investments in other financial assets


(129,590)


(91,337)

Investment in Acreage Arrangement


(395,190)


-

Change in acquisition related liabilities


(24,482)


-

Net cash outflow on acquisition of noncontrolling interests


-


(6,712)

Net cash outflow on acquisition of subsidiaries


(498,838)


(344,413)

Net cash used in investing activities


(347,654)


(3,227,985)

Cash flows from financing activities:





Proceeds from issuance of common shares and warrants


-


5,072,500

Payment of share issue costs


-


(21,646)

Proceeds from issuance of shares by Canopy Rivers


1,172


154,976

Proceeds from exercise of stock options


41,413


48,159

Proceeds from exercise of warrants


446


18,790

Issuance of long-term debt


14,761


600,000

Payment of debt issue costs


-


(16,380)

Repayment of long-term debt


(114,953)


(4,680)

Net cash provided by financing activities


(57,161)


5,851,719

Effect of exchange rate changes on cash and cash equivalents


(204)


69,567

Net increase in cash and cash equivalents


(1,177,654)


2,158,270

Cash and cash equivalents, beginning of year


2,480,830


322,560

Cash and cash equivalents, end of year

$

1,303,176

$

2,480,830

 

Schedule 5











Adjusted EBITDA1 Reconciliation (Non-GAAP Measure)








Three months ended

Year ended


Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

(in thousands of Canadian dollars, unaudited)

2020

2019

2019

2019

2020

Net loss

$

(1,326,405)

$

(109,634)

$

242,650

$

(194,051)

$

(1,387,440)

Income tax (recovery) expense


(98,666)


(27,448)


(5,767)


10,267


(121,614)

Other expense (income), net


376,295


(57,963)


(509,893)


(32,768)


(224,329)

Loss on equity method investments


57,752


2,664


2,171


1,833


64,420

Share-based compensation


78,354


61,679


92,881


87,362


320,276

Acquisition-related costs


1,840


3,256


2,562


13,182


20,840

Depreciation and amortization


48,781


30,464


25,016


20,752


125,013

Asset impairment and restructuring costs


623,266


-


-


-


623,266

Restructuring and other charges recorded in cost of goods sold


132,089


-


-


-


132,089

Charges related to the flow-through of inventory step-up on business combinations


4,687


-


-


-


4,687

Adjusted EBITDA

$

(102,007)

$

(96,982)

$

(150,380)

$

(93,423)

$

(442,792)

 

Schedule 6








Adjusted EBITDA1 - IFRS to US GAAP Differences






Dec 31,

Sep 30,

Jun 30,

(in thousands of Canadian dollars, unaudited)


2019

2019

2019

Adjusted EBITDA, as previously reported under IFRS


$

(91,661)

$

(155,745)

$

(92,060)

Adjustments related to differences in lease accounting on depreciation and amortization expense



(2,878)


(2,857)


(2,639)

Adjustments related to other transition differences



(2,443)


8,222


1,276

Adjusted EBITDA, as reported under US GAAP


$

(96,982)

$

(150,380)

$

(93,423)












1 Adjusted EBITDA is calculated as the reported operating income (loss), which excludes interest and income taxes, adjusted for the removal of share-based compensation expense, depreciation and amortization expense, asset impairment and restructuring costs, restructuring and other charges recorded in cost of goods sold, and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition-related costs. See "Non-GAAP Measures".

 

Schedule 7











Gross Margin - IFRS to US GAAP Differences








Three months ended

Year ended


Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

(in thousands of Canadian dollars, unaudited)

2020

2019

2019

2019

2020

Net revenue

$

107,913

$

123,764

$

76,613

$

90,482

$

398,772












Cost of goods sold, as previously reported under IFRS:




81,953


86,321


77,313



Restatement of royalty expense




-


-


(4,131)



Reclassification adjustments related to US GAAP transition




3,603


(13,351)


(990)



Cost of goods sold, as reported under US GAAP


199,738


85,556


72,970


72,192


430,456

Gross margin, as reported under US GAAP

$

(91,825)

$

38,208

$

3,643

$

18,290

$

(31,684)

Gross margin percentage, as reported under US GAAP


(85%)


31%


5%


20%


(8%)












 

Schedule 8











Adjusted Gross Margin1  Reconciliation (Non-GAAP Measure)








Three months ended

Year ended


Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

(in thousands of Canadian dollars, unaudited)

2020

2019

2019

2019

2020

Gross margin, as reported under US GAAP

$

(91,825)

$

38,208

$

3,643

$

18,290

$

(31,684)

Adjustments to gross margin:











Restructuring and other charges recorded in cost of goods sold


132,089


-


-


-


132,089

Charges related to the flow-through of inventory step-up on business combinations


4,687


-


-


-


4,687

Adjusted gross margin 1

$

44,951

$

38,208

$

3,643

$

18,290

$

105,092

Adjusted gross margin percentage 1


42%


31%


5%


20%


26%

1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See "Non-GAAP Measures".

 

Schedule 9




Free Cash Flow Reconciliation1

Three months ended


March 31,

March 31,

(in thousands of Canadian dollars, unaudited)

2020

2019

Net cash provided by (used in) operating activities

$

(210,639)

$

(240,132)

Purchases of and deposits on property, plant and equipment


(94,086)


(149,220)

Free cash flow1

$

(304,725)

$

(389,352)







Year ended


March 31,

March 31,

(in thousands of Canadian dollars, unaudited)

2020

2019

Net cash used in operating activities

$

(772,635)

$

(535,031)

Purchases of and deposits on property, plant and equipment


(704,944)


(644,456)

Free cash flow1

$

(1,477,579)

$

(1,179,487)


1Free cash flow is a non-GAAP measure and is calculated as net cash provided by (used in) operating activities, less purchases of and deposits on property, plant and equipment.

 

CONTACT: Laura Nadeau, Media Relations, [email protected], 613-485-0386; Judy Hong, Vice President, Investor Relations (USA), [email protected]; Tyler Burns, Vice President, Investor Relations (Canada), [email protected], 855-558-9333 ext. 122


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