Canopy Growth's Shares Slide On Fiscal 2021 Billion Dollar Losses, Claims Its Still 'On Track To Achieving Positive Adjusted EBITDA'

Canopy Growth Corporation WEED NASDAQ: , CGC)) reported Tuesday its fourth quarter and fiscal year 2021 earnings with a net loss for the year amounting to CA$1.7 billion ($1.41 billion), representing a CA$283 million wider loss versus FY 2020. 

The Canadian cannabis giant attributed these results to various expenses, credit losses, lower income tax recoveries, advancements of gross margins, and sales reductions.

Annual Financial Highlights 

• During fiscal 2021, Canopy's net revenue of CA$546.6 million, up by 37% from fiscal 2020;
• Its total net cannabis revenue in the period amounted to CA$279 million, which is 28% higher than in the prior year;
• The gross margin for the year was 12% compared to negative 8% in the previous year;
• During the year, the company lowered its expenses by 17%, compared to the fiscal year 2020, by making several reductions including those of 20% and 22% in sales and marketing, and general and administrative, respectively;
• Its positive adjusted EBITDA was a loss of CA$340 million, compared to CA$443 million in the previous year;
• At the end of the reporting period, on March 31st, the company held CA$2.3 billion in cash and short-term investments, compared to CA$1.98 billion on March 31st, 2020.

Quarterly Financial Highlights 

• For the fourth quarter of fiscal 2021, Canopy disclosed a net loss of CA$617 million, representing a CA$710 million narrower loss compared to the same quarter of fiscal 2020;
• Quarterly net revenue amounted to CA$148 million, which is up by 38% from the same period of the prior year;
• Its total net cannabis revenue was CA$101 million, up by 27% from the same quarter of 2020;
• The gross margin was 7%, versus a negative 85% in the fourth quarter of fiscal 2020;
• Canopy’s adjusted EBITDA for the three months ended March 31st was a loss of CA$94 million, representing a CA$8 million narrower loss versus the same period of 2020.

“We made tremendous progress improving our supply chain and right-sizing our manufacturing footprint, bringing supply and demand into balance,” said Mike Lee, Canopy's 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.”

Business Milestones 

Canopy Growth kept the number one market share in the total flower category in the Canadian adult-use market in the fourth quarter of fiscal 2021, securing more than 19% share of the market;

• It captured a 35% dollar share of the total beverage category during the year, by rolling out a portfolio of THC beverages in the Canadian adult-use market;
• The company projects that the acquisition of Ontario-based cannabis brand Ace Valley  and the announced purchase of Supreme Cannabis will improve Canopy’s position in the Canadian adult-use space with a pro-forma market share of 18.1% in the fourth quarter of fiscal 2021;
• In the previous period, Canopy launched several of Martha Stewart's CBD products in the U.S. and they 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;
• During the quarter, the company said it had become the first U.S. CB beverage brand to strike a deal with a giant beverage distributor Southern Glazer’s Wine & Spirit;
• The company noted it is still on track to reaching positive adjusted EBITDA in the second half of fiscal 2022.

Price Action

Canopy’s shares were trading 5.37% lower at $24.69 per share at the time of writing.

Image Credit: Matca Films