Canopy Growth(CGC) - 2026 Q1 - Quarterly Results

Q1 FY2026 Financial & Operational Highlights Canopy Growth saw 9% revenue growth to $72.1 million, improved operating loss, and reduced cash outflow, despite lower gross margins Consolidated Financial Performance Consolidated net revenue rose 9% to $72.1 million, operating loss improved 21%, and free cash flow outflow decreased 79%, but gross margin fell to 25% Consolidated Financial Performance Metrics (thousands of CAD) | Metric (thousands of CAD) | Q1 FY2026 | vs. Q1 FY2025 | | :------------------------ | :-------- | :------------ | | Net Revenue | $72,134 | 9% | | Gross margin percentage | 25% | (1,000) basis points | | Net loss from continuing operations | $(41,527) | 68% | | Adjusted EBITDA | $(7,916) | (50%) | | Free cash flow | $(11,643) | 79% | - Operating loss from continuing operations was $23 million in Q1 FY2026, representing an improvement of 21% compared to Q1 FY2025, driven primarily by a reduction in operating expenses[11] - Cash and short-term investments increased to $144 million at June 30, 2025, from $131 million at March 31, 2025[11] Segment Performance Overview Canopy Growth now reports two segments: Cannabis revenue grew 24%, while Storz & Bickel revenue declined 25% - As of the three months ended June 30, 2025, the Company began reporting its financial results for the following two reportable segments: (i) Cannabis - includes the global production, distribution and sale of a diverse range of cannabis and cannabis-related products; and (ii) Storz & Bickel - includes the production, distribution and sale of vaporizers and accessories[4] Segment Net Revenue (millions of CAD) | Segment (millions of CAD) | Q1 FY2026 | Q1 FY2025 | Vs. Q1 FY2025 | | :------------------------ | :-------- | :-------- | :------------ | | Cannabis | $57.0 | $46.1 | 24% | | Storz & Bickel | $15.1 | $20.1 | (25%) | | Net revenue (Consolidated)| $72.1 | $66.2 | 9% | Cannabis Segment Performance Cannabis revenue increased 24% year-over-year, driven by strong Canadian adult-use sales, though gross margins decreased to 24% Cannabis Sub-segment Revenue (millions of CAD) | Cannabis Sub-segment (millions of CAD) | Q1 FY2026 | Q1 FY2025 | Vs. Q1 FY2025 | | :------------------------------------- | :-------- | :-------- | :------------ | | Canadian adult-use cannabis | $27.0 | $18.9 | 43% | | Canadian medical cannabis | $21.2 | $18.8 | 13% | | International markets cannabis | $8.8 | $8.4 | 5% | - Total Claybourne infused PRJ sales increased 58% sequentially in Q1 FY2026 compared to Q4 FY2025, maintaining 2 category market share in Alberta, 3 in Ontario, and 3 nationally[11] - Cannabis gross margins decreased to 24% in Q1 FY2026 compared to 33% in Q1 FY2025, primarily due to a shift to higher-cost manufactured products like infused PRJs in Canada and lower sales in the high-margin Poland market[11] - The Company expects to improve cannabis gross margins in the second half of FY2026 through automation technology, increased PRJ production capacity, and pursuit of margin-accretive bulk cannabis sales in Canada and Europe[11] Storz & Bickel Segment Performance Storz & Bickel net revenue decreased 25% to $15 million, with gross margin falling to 29%, as cost efficiency measures are implemented Storz & Bickel Financial Performance (thousands of CAD) | Metric (thousands of CAD) | Q1 FY2026 | Q1 FY2025 | | :------------------------ | :-------- | :-------- | | Net revenue | $15,152 | $20,119 | | Gross margin percentage | 29% | 39% | - Storz & Bickel delivered net revenue in Q1 FY2026 of $15 million, representing a decrease of 25% compared to Q1 FY2025, primarily attributable to lapping strong sales in the prior year and consumer economic uncertainty[11] - Storz & Bickel has implemented several cost efficiency measures, including bringing additional manufacturing capabilities in-house and headcount reductions, which are expected to reduce cost of goods sold and SG&A expenses over the coming quarters[11] - Storz & Bickel is preparing to launch a new vaporizer in the second half of calendar year 2025, which the Company believes will generate strong consumer interest[11] Corporate Information & Disclosures This section covers board appointments, webcast details, non-GAAP definitions, company overview, and forward-looking statements Board of Directors Appointment Margaret Shan Atkins was appointed to the Board, bringing extensive experience in retail, consumer goods, and finance - Margaret Shan Atkins was appointed to Canopy Growth's Board of Directors, effective August 6, 2025[14] - Ms. Atkins brings extensive experience in retail strategy and operations, consumer goods, wholesale distribution, cybersecurity oversight, accounting and finance, and private investment in both the U.S. and Canada[14] - She previously served as a partner in the consumer and retail practice of Bain & Company and a C-suite executive at a Fortune 15 public retailer, and currently serves on the boards of Darden Restaurants and SpartanNash[15][16] Webcast & Conference Call Canopy Growth will host a conference call and webcast on August 8, 2025, to discuss Q1 FY2026 financial results - The Company will host a conference call and audio webcast with Luc Mongeau, CEO and Tom Stewart, Interim CFO at 10:00 AM Eastern Time on August 8, 2025[19] - A live audio webcast will be available at: https://onlinexperiences.com/Launch/QReg/ShowUUID=8135284A-F8CD-45B7-A384-634DE671498[20](index=20&type=chunk) Non-GAAP Financial Measures This section defines Adjusted EBITDA and Free Cash Flow, key non-GAAP measures for performance and liquidity - Adjusted EBITDA is a non-GAAP measure used by management to demonstrate the operating performance of businesses, calculated as net income (loss) adjusted to exclude income tax, other income/expense, loss on equity method investments, share-based compensation, depreciation/amortization, asset impairment/restructuring costs, and acquisition/divestiture costs[20] - Free cash flow is a non-GAAP measure that presents meaningful information regarding the amount of cash flow required to maintain and organically expand the Company's business and its liquidity requirements, calculated as net cash provided by (used in) operating activities less purchases of and deposits on property, plant and equipment[21] About Canopy Growth Canopy Growth is a leading cannabis company with global operations and a U.S. THC market strategy via Canopy USA - Canopy Growth is a world-leading cannabis company dedicated to unleashing the power of cannabis to improve lives, delivering innovative products from owned and licensed brands including Tweed, 7ACRES, DOJA, Deep Space, and Claybourne, as well as category defining vaporization devices by Storz & Bickel[24] - Canopy Growth serves medical cannabis patients globally with principal operations in Canada, Europe and Australia[24] - Canopy Growth has established a comprehensive ecosystem to realize the opportunities presented by the U.S. THC market through an unconsolidated, non-controlling interest in Canopy USA, LLC, which includes ownership of Acreage Holdings, Inc., Wana Wellness, LLC, and Lemurian, Inc. ('Jetty')[25] Forward-Looking Statements This disclaimer highlights risks and uncertainties that could cause actual results to differ from forward-looking expectations - This press release contains 'forward-looking statements' within the meaning of applicable securities laws, which involve certain known and unknown risks and uncertainties, and readers are cautioned that actual results or outcomes may differ materially from those anticipated[27] - Forward-looking statements predict or describe future operations, business plans, business and investment strategies, and the performance of investments, generally identified by terms such as 'intend,' 'goal,' 'expect,' 'project,' 'will,' and 'should'[27] - A variety of factors, including laws and regulations, impairment losses, debt refinancing ability, impacts of the Canopy USA strategy, competitive conditions, and various operational and market risks, could cause actual results to differ materially[28][34] Financial Schedules This section presents condensed interim consolidated financial statements and reconciliations for key metrics Condensed Interim Consolidated Balance Sheets Balance sheets show total assets slightly decreased to $904.7 million, with cash and equivalents increasing to $126.2 million Condensed Interim Consolidated Balance Sheets (thousands of CAD) | ASSETS (thousands of CAD) | June 30, 2025 | March 31, 2025 | | :------------------------ | :------------ | :------------- | | Cash and cash equivalents | $126,202 | $113,811 | | Total current assets | $303,359 | $294,574 | | Total assets | $904,671 | $917,701 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Total current liabilities | $98,669 | $94,404 | | Total liabilities | $415,695 | $430,488 | | Total shareholders' equity| $488,976 | $487,213 | Condensed Interim Consolidated Statements of Operations Net loss from continuing operations improved to $(41.5) million, with net revenue up but gross margin down Condensed Interim Consolidated Statements of Operations (thousands of CAD) | Metric (thousands of CAD) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | | Net revenue | $72,134 | $66,212 | | Cost of goods sold | $54,096 | $43,181 | | Gross margin | $18,038 | $23,031 | | Total operating expenses | $40,662 | $52,139 | | Operating loss from continuing operations | $(22,624) | $(29,108) | | Net loss from continuing operations | $(41,527) | $(129,191) | | Basic and diluted loss per share (Continuing operations) | $(0.22) | $(1.63) | Condensed Interim Consolidated Statements of Cash Flows Net cash outflow from operating activities significantly improved to $(10.3) million in Q1 FY2026 Condensed Interim Consolidated Statements of Cash Flows (thousands of CAD) | Cash Flow Activity (thousands of CAD) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(10,337) | $(51,780) | | Net cash used in investing activities | $(705) | $(33,029) | | Net cash provided by financing activities | $25,460 | $105,775 | | Net increase in cash and cash equivalents | $12,391 | $21,856 | | Cash and cash equivalents, end of period | $126,202 | $192,156 | Adjusted EBITDA Reconciliation Adjusted EBITDA loss was $(7.9) million in Q1 FY2026, influenced by lower net loss and other income/expense changes Adjusted EBITDA Reconciliation (thousands of CAD) | Metric (thousands of CAD) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | | Net loss from continuing operations | $(41,527) | $(129,191) | | Income tax expense | $291 | $6,194 | | Other (income) expense, net | $18,612 | $93,889 | | Share-based compensation | $(99) | $4,151 | | Acquisition, divestiture, and other costs | $2,484 | $8,627 | | Depreciation and amortization | $9,670 | $11,030 | | Loss on asset impairment and restructuring | $2,653 | $20 | | Adjusted EBITDA | $(7,916) | $(5,280) | Free Cash Flow Reconciliation Free cash flow outflow significantly improved to $(11.6) million, driven by reduced operating cash use and capital expenditures Free Cash Flow Reconciliation (thousands of CAD) | Metric (thousands of CAD) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities - continuing operations | $(10,337) | $(51,780) | | Purchases of and deposits on property, plant and equipment - continuing operations | $(1,306) | $(3,920) | | Free cash flow - continuing operations | $(11,643) | $(55,700) | Segmented Gross Margin Cannabis segment gross margin was 24%, down from 33%, while Storz & Bickel's gross margin decreased to 29% Segmented Gross Margin (thousands of CAD) | Segment (thousands of CAD) | Q1 FY2026 Net Revenue | Q1 FY2026 Gross Margin | Q1 FY2026 Gross Margin % | Q1 FY2024 Net Revenue | Q1 FY2024 Gross Margin | Q1 FY2024 Gross Margin % | | :------------------------ | :-------------------- | :--------------------- | :----------------------- | :-------------------- | :--------------------- | :----------------------- | | Cannabis | $56,982 | $13,591 | 24% | $46,093 | $15,271 | 33% | | Storz & Bickel | $15,152 | $4,447 | 29% | $20,119 | $7,760 | 39% |