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Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) announced its financial results for the first quarter ended June 30th, 2023 yesterday. All financial information below is reported in Canadian dollars unless otherwise indicated, and compared to the previous quarter.
 

Q1 Financial Highlights

• Total Revenue: DOWN 2.8% to $108.7M
  • Canadian: DOWN 25.8% to $38.6M  
    • Recreational: DOWN 37.8% to $24.2M
    • Medical: UP 9.9% to $14.4M
  • International: DOWN 27.1% to $10.2M
  • Total Cannabis: DOWN 26.1% to $48.8M 
    • Share of Total Revenue: DOWN to 44.9% from 59.0%
  • Other Consumer Products: UP 30.8% to $59.9M 
    • BioSteel (beverages): UP 140.7% to $32.5M
    • Storz & Bickel (vaporizers): DOWN 16.2% to $18.1M
    • This Works: No Change @ $6.0M
    • Other: DOWN 29.8% to $3.3M
  • Consumer Products Share of Total Revenue: UP to 55.1% from 41.0%
• Gross Margin: UP to 5% from (142)%
• Net Income (Loss): UP to $(42)M from $(579)M
• Adj. EBITDA: UP 52.5% to $(58)M
• Cash on Hand: DOWN 27.1% to $571M 
• Gross Debt: DOWN 20.0% to $1,045M
   

Q1 Operational Highlights

• Canadian cannabis business continued its transformation to a simplified, asset-light model in Q1 FY2024, building on the divestiture of national retail operations, closure of eight cultivation facilities to focus on two purpose-built cultivation sites, and outsourcing of vape, beverage, and edible production to independent, third-party manufacturing organizations.
• Achieved cost reduction of $47 million in Q1 FY2024.
• Reviewing strategic options for BioSteel Sports Nutrition Inc. (“BioSteel”), including a potential sale of the business, in order to remove the cash burden on Canopy Growth as quickly as possible.
• Entities that are expected to be acquired by Canopy USA continue to demonstrate momentum and Canopy Growth continues to work with regulators to advance its novel structure.
   

Management Commentary

David Klein, Chief Executive Officer, said:

• “Our performance in the first quarter of Fiscal 2024 validates the difficult but transformative changes we made...
• Our asset-light approach is enabling the agile execution of business initiatives, allowing us to move faster and to be more responsive to consumers.”

Judy Hong, Chief Financial Officer, said:

• “With sustained momentum in our core businesses and our cost reduction program, we believe we are on a path to achieving positive Adjusted EBITDA across all our businesses, except BioSteel, exiting Fiscal 2024...
• We also remain focused on opportunities to strengthen our financial position through further reducing cash burn, monetizing non-core assets, and reducing debt.”
   

Recent Stock Performance

• The current stock price of $0.47 represents an increase of 20.5% since the end of June but the stock remains DOWN 79.3% YTD.

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