Canopy Growth Corp (NYSE:CGC) Q4 2019 Earnings Conference Call June 21, 2019 8:30 AM ET
Canopy Growth Corp（纽约证券交易所代码：[CGC]）2019年第四季度收益电话会议2019年6月21日美国东部时间上午8:30
Bruce Linton - Co-Founder, Chairman & Co-CEO
Mike Lee - Acting CFO
- Bruce Linton - 联合创始人，董事长兼联合首席执行官
- Mike Lee - 代理首席财务官
Christopher Carey - Bank of America Merrill Lynch
Vivien Azer - Cowen and Company
Peter Sklar - BMO Capital Markets
Oliver Rowe - Scotiabank
Graeme Kreindler - Eight Capital
Douglas Miehm - RBC Capital Markets
Michael Lavery - Piper Jaffray Companies
Brett Hundley - Seaport Global Securities
Ryan Macdonell - GMP Securities
Owen Bennett - Jefferies
Krishna Ruthnum - CIBC Capital Markets
Bill Papanastasiou - Canaccord Genuity Limited
Aaron Grey - Alliance Global Partners
- 克里斯托弗凯里 - 美林银行美林
- Vivien Azer - Cowen and Company
- Peter Sklar - BMO资本市场
- Oliver Rowe - Scotiabank
- Graeme Kreindler - 八大资本
- Douglas Miehm - 加拿大皇家银行资本市场
- Michael Lavery - Piper Jaffray公司
- Brett Hundley - 海港全球证券
- Ryan Macdonell - GMP证券
- Owen Bennett - Jefferies
- Krishna Ruthnum - CIBC资本市场
- Bill Papanastasiou - Canaccord Genuity Limited
- Aaron Gray - Alliance Global Partners
Good morning, and welcome to Canopy Growth Fourth Quarter and Fiscal Year 2019 Financial Results Conference Call. On June 20, 2019, after the close of the financial markets, Canopy Growth issued a news release announcing its financial results for the fourth quarter and fiscal year ended March 31, 2019. This news release is available on Canopy Growth's website and on SEDAR.
On this call this morning, we have Bruce Linton, Canopy Growth's Founder, Chairman and co-Chief Executive Officer; and Mike Lee, Canopy Growth's Executive Vice President and Chief Financial Officer. [Operator Instructions]. Certain matters discussed in today's conference call or answers that may be given to questions could constitute forward-looking statements. Actual results could differ materially from those anticipated. Risk factors that could affect results are detailed in the company's annual information form and other public filings that are made available on SEDAR.
During this conference call, Canopy Growth will refer to supplemental non-GAAP measure, adjusted EBITDA. These measure does not have any standardized meeting prescribed by IFRS. Adjusted EBITDA is defined in the press release issued yesterday as well as in this period's management's discussion and analysis document that will be filed on SEDAR. Please note that all financial information is provided in Canadian dollars unless otherwise specified.
Following prepared remarks by Mr. Linton and Mr. Lee, the company will conduct a question-and-answer session, during which questions will be taken from analysts. [Operator Instructions].
I would now like to turn our meeting over to Bruce Linton. Mr. Linton, please go ahead.
早上好，欢迎来到Canopy Growth第四季度和2019财年财务业绩电话会议。 2019年6月20日，金融市场收盘后，Canopy Growth发布了新闻稿，公布了截至2019年3月31日的第四季度和财年的财务业绩。该新闻稿可在Canopy Growth的网站和SEDAR上获得。
今天上午，我们邀请了Canopy Growth的创始人，董事长兼联席首席执行官Bruce Linton;和Canopy Growth的执行副总裁兼首席财务官Mike Lee。 [操作员说明]。今天电话会议中讨论的某些事项或可能提出问题的答案可能构成前瞻性陈述。实际结果可能与预期的结果大不相同。可能影响结果的风险因素在公司的年度信息表和SEDAR上提供的其他公开文件中有详细说明。
Great. Thank you, and welcome, Mike, to your first call. So the platform was busy last year. We were expanding globally, delivering multiple market platforms from rec to medical, investing quite a lot of capital. And the net effect is revenues on a 12-month basis were $226 million, a 190% year-over-year growth. We saw gross revenue in Canada with the rec market $140 million. About 24,000 kilograms in the fiscal year compared to 8,700 kilograms of prior fiscal year, and we shipped over 5 million units in the fiscal year compared to about 1 million in the prior year.
So we have a very active business on that level, but really what was it about? Well, today, we sit with IP of 90 patents that were either acquired or issued and it's our view that intellectual property, the containment of novel outcomes, creating unique brands based on science is going to be the future and we're heavily invested. So there is a portfolio growing day-on-day. We announced approximately two weeks ago, 60 trials that are either ongoing or near term ready to get going. And what you're going to see is a shift globally from a discussion of medical marijuana to cannabinoid therapies. Our positioning of Spectrum is about that, our acquisition of C3 expands that. It's a major theme.
And so we expect that while year-on-year, if you look at the total number of patients we had in the medical sales, it's taken a bit of a step back, which was anticipated. We've gone to book 70,000 patients, but that's in part when you migrate products such as LBS, could also be known as Leafs By Snoop, and DNA products from the medical platform to the recreational platform. We've just readjusted our portfolio, and we expect to see growth year-on-year in medical. This is not something that we didn't expect and we are well prepared to ramp it up.
U.S. hemp, we announced our plan, and we're in full ramp-up mode. Contracts for farmers, announced sites, RFPs out for construction works that we could begin refitting buildings, working on multiple states so that they take a pattern and follow a process that's very similar to New York state, developing brands, creating and testing products and getting into production ramp that well there is no absolute certainty. We certainly are aiming to have a Q4 in-channel product set.
Acreage. Yesterday -- day before yesterday, we had our mutual votes with great shareholder support. Yesterday, you saw some activity in the U.S. system of making decisions on what is going to be permissible, where it certainly looks like the host representative supports cross-party basis with the notion that the DOJ should not be using funds to go and pursue states that have made a decision to act in certain ways, whether it's recreational or medical.
And so we continue to believe that the 20 states that Acreage has and/or soon ability to license our IP, our brands and our products into them should accelerate their ability to be very dominant in those states. And we believe that the alignment between Canopy and Acreage is excellent now and we'll continue to benefit from what we've learned on scale.
因此，我们期望与去年同期相比，如果你看一下我们在医疗销售中的患者总数，那就需要一点退步，这是预料之中的。我们已经预订了70,000名患者，但部分当您迁移LBS等产品时，也可称为Leafs By Snoop，以及从医疗平台到休闲平台的DNA产品。我们刚刚重新调整了我们的投资组合，我们预计医疗保健将逐年增长。这不是我们没想到的，我们已经准备好提升它。
面积。昨天 - 前天，我们得到了共同的投票，得到了股东的大力支持。昨天，你看到美国系统中有一些活动可以决定什么是可以允许的，主机代表看起来肯定支持跨党派的基础，因为司法部不应该用资金去追求国家已决定以某种方式行事，无论是娱乐还是医疗。
So what do we learn on scale? If you look at Q3 fiscal '18, Canopy had about 600,000 square feet of licensed facility. And we understood and delivered a margin, a gross margin greater than 50%. And we could have stayed there, and we would have been a nice tidy little company, probably quite profitable. But what we thought was important is when you acquire a bigger supporting partner and they bring CAD 5 billion and there is a global opportunity, which we are, in our opinion, the best position for, what you need to do is use that capital to build scale and we did.
And so you've seen, I think, the bottom of our margin trough, which is about 16% this quarter. And it's because as you build out from 600,000 square feet license in Canada to 4.8 million square feet over about a five quarter period, you end up with a lot of assets that are coming on stream but are not on stream and they carry burden that doesn't show up in benefit. But the point is if the exercise does not benefit in a quarter or in a day or a week, it's that by the time we exit this year, we're moving up the margin model back to where we were and we'd like to do that well or better.
And how you get there is events that will happen in December of this year and carry on into the future, which is a platform that will regulate the sale of higher-margin products because they move up the finished good value chain, things like chocolates or vapes. Our facilities for producing chocolates and producing vapes are licensed platform right now where we could be producing cannabis products. We can't yet produce chocolates or vapes, but the actual platform as far as the medical marijuana and recreational marijuana licensing schemes in Canada has been approved in those areas. So we're not chasing approvals. We're waiting for regulations to say that we're permissible to produce.
We've had a lot of talk about beverages. Our beverage platform, the photos necessary to submit to Health Canada are scheduled to be prepared and could be submitted on or about June 28. That would follow where we will start to see tanks arriving early July; processing skids mid and late July; things like piping equipment and consumables early August; qualification of the equipment August to September, so that we're looking at a mid-September finish construction. And I will give you that detail in that there is a bit more spend to go, but the finish line will be products measured in 2 to 10 milligrams in a beverage that will be unique, differentiable, we believe, highly brandable.
We think we're in the leading position globally to create these products that are differentiated and that the margins that will yield off of them are going to be rewarded to you as an investor and to us as a company because we've really put our focus on how do we get to the front, how do we get to scale. And this has sort of been the line where we got to.
Finally, we don't want you to just focus on Canada, but we expect by the time we get to the end of year, this is going to be a country in which we can show you a product set, a margin set, and a breakout of R&D and core spend. So, you will understand this is a business that could go global. Global is now starting to be a very significant part of our spend. We acquired C3 in Europe, which is Europe's largest cannabinoid-based pharmaceutical manufacturer, 5 approved cannabinoid therapies and they had sales of $40-plus million in 2018, that is a key piece. Acquired This Works a global leader in natural skincare and sleep solutions. It's going to strengthen our ability to enter markets and bring CBD-based offerings that align with a well-established 34-plus country channel. So these are the sorts of actions that we've taken.
I'm going to hand it over to Mike because I would like him to take the time to walk through the model, and we can move to questions. But this is a framework we're operating in. Mike?
Thank you, Bruce. Good morning, everybody. First allow me to introduce myself. I joined Canopy Growth Corporation in February of this year as Executive Vice President Finance, working with Tim Saunders. My background is largely in the beverage alcohol industry, having spent over 20 years in this space, 15 of that was with E. & J. Gallo Winery, working in a finance capacity for most of my tenure, notably spending my time partnering with various commercial teams across the business. That is where I really cut my teeth as a commercial finance leader.
After Gallo, I went on to work for PepsiCo, where I was Division CFO in their beverage business, spending most of my time on revenue management, pricing architecture and operations finance, again partnering closely with the business throughout. A few years later, I joined Constellation Brands and was quickly promoted to Division CFO of Wine & Spirits where I spent most of my time.
As for my pathway leading to Canopy, I would say, I became very enamored with this company back in 2017 when Constellation made their first investment in Canopy. And when the second larger investment was made in 2018, I was offered the opportunity to join the Canopy team. Flash forward a few months and I'm now working as acting CFO, awaiting my security clearance from Health Canada, which we expect to receive in the near future.
Before I move to my review of fiscal '19 results, I would like to formally thank Tim Saunders for his support during the last several months. Tim has been committed to my success from the day we met, and I appreciate everything that he has done to ensure a smooth transition. Tim is really a class act, and I'm thrilled that he will continue to serve Canopy Growth in a new capacity.
Now on to our fiscal '19 results. This has been a historic year for Canopy Growth. We spent years preparing for the launch of the recreational channel in Canada and our leadership position since this historic day last October is evidence that our strategy is working. We generated net revenue of $226.3 million, representing an increase of 191% over fiscal '18. We sold 24,300 kilograms in kilogram equivalents in fiscal '19, up 180% over fiscal '18.
Gross revenue in the Canadian rec channel totaled $140.5 million in fiscal '19, including $117.4 million in the product wholesale to the provinces and territories. Gross medical sales generated $78.9 million in fiscal '19, up 6% versus last year.
Further expanding on medical, our international medical business grew to $10 million, up 170% versus a year ago. Medical sales in Canada experienced a modest decrease of 3% during the fiscal year. Our online medical store in Canada saw a period of major transformation during the year with established brands, Tweed, DNA Genetics, LBS and certain CraftGrow partners largely transitioning to the rec channel. This product transition, along with supply challenges in specific product categories, which have since been remedied, led to a decline in the medical channel in the second half of fiscal '19. We also had other revenue of $34 million, which includes revenue from our clinics, merchandise and our medical device company, Storz & Bickel.
谢谢你，布鲁斯。大家早上好。首先让我自我介绍一下。我今年2月加入了Canopy Growth Corporation，担任财务执行副总裁，与Tim Saunders合作。我的背景主要是饮料酒业，在这个领域花了20多年，其中15个是E.＆J。Gallo Winery，在我任职期间的大部分时间都在财务方面工作，特别是花时间与各种合作伙伴整个企业的商业团队。这就是我作为商业金融领导者真正切入牙齿的地方。
Moving beyond the top line, cultivation and post-harvest processing capacity has been a top investment priority and our investments are paying off. In fiscal '19, we harvested 46,900 kilograms of cannabis, more than double the amount we harvested last year. But more importantly, our current quarter, referring to Q1 of fiscal '20, harvest is on track to achieve 34,000 kilograms, which is more than double what we harvested in Q4 and nearly quadrupled what we harvested in Q3. We're expecting to see further capacity increases as we shift from build and license to operate and optimize across each of our facilities.
Turning for a moment to cash flows during fiscal '19, there are three themes that speak to our priorities. Number one, we're building capacity in Canada, the U.S. and beyond. In fiscal '19, we invested $644 million in fixed assets. And although our initial wave of investments in Canada infrastructure is nearing completion, we are continuing to invest in various extraction and advanced manufacturing capabilities to further automate our processes and prepare for the next wave of product platforms later this calendar year. We continue to invest internationally, and this is expected to accelerate into the upcoming fiscal year as we build out our CBD platform in the U.S. and increase our investment beyond North America.
Number two, we're building organizational scale. We will continue to see investments in our organization for the foreseeable future as we complete the build-out of our Canadian team, expand our global organizational footprint and invest in scalable corporate capabilities, including finance, operations, engineering and information technology.
In addition, we will continue to invest in the development of new cannabis products, including clinical research activities being undertaken by Spectrum Therapeutics to prove the science and safety of new cannabis-based medical therapies. As a result of building organizational scale and investing in the development of future products ahead of revenue, we incurred $666 million in operating expenses during the year, of which $283 million is noncash expenses related to stock-based compensation for both employees and acquisition milestones.
Number three, M&A continues to be a priority. We invested $380 million in acquisitions in fiscal '19, including the acquisitions of AgriNextUSA, Colombian Cannabis, ebbu, HIKU brands and Storz & Bickel as well as the outstanding shares of Canopy Health Innovations and BC Tweed, and it could be expected that we will make additional acquisitions in the future. The $5 billion investment from Constellation Brands continues to serve as a critical war chest that will fuel our expansion plans in coming years and has enabled Canopy Growth to exit the fiscal year with the strongest balance sheet in the industry.
Let's briefly review adjusted EBITDA, our supplemental non-GAAP measure for fiscal '19. Adjusted EBITDA is defined as earnings from operations as reported before interest, tax, depreciation adjusted for other noncash items, such as stock-based compensation and accounting for biological assets and inventory as well as acquisition costs. We report adjusted EBITDA believing it's a useful financial metric that will help investors assess the operating performance of our business before the impact of investments, acquisitions, income taxes and noncash fair value measurements.
第三，并购仍然是一个优先事项。我们在19财年投资3.8亿美元用于收购，包括收购AgriNextUSA，哥伦比亚大麻，ebbu，HIKU品牌和Storz＆Bickel以及Canopy Health Innovations和BC Tweed的流通股，我们可以预期将来进行额外的收购。 Constellation Brands的50亿美元投资继续成为一个关键的战争储备，将在未来几年为我们的扩张计划提供动力，并使Canopy Growth在本财年的业绩最强劲的资产负债表中退出。
Adjusted EBITDA amounted to a loss of $257 million in fiscal '19 as compared to a loss of $36 million in fiscal '18. The increased losses are directly tied to my earlier commentary about investing ahead of revenue to build scale.
To further illustrate, our investments in sales and marketing increased from $38 million to $154 million as we're hiring sales and marketing teams across Canada, tasking 20 company-owned retail stores across the country, investing in brand building for the first time and building systems and processes to analyze the business and study consumers.
In G&A, our investments increased from $44 million to $168 million as we've built out our global team, our back office functions, including finance, technology, human resources and legal.
Moving beyond operating expenses, other expenses in fiscal '19 included a noncash expense of $203 million related to fair value changes in our senior convertible notes, which has been recorded through the consolidated statement of operations. And these fair value changes are due to the increase in Canopy Growth stock price from the issuance of the senior convertible notes in June of 2018 through March 31 of 2019.
Our net loss on a reported basis, which includes all fair value adjustments for biological asset accounting as well as many other noncash items, such as stock-based compensation, was $670 million as compared to a net loss of $54 million in fiscal '18.
I would like to take a moment to review select financial operational metrics for the fourth quarter of fiscal '19. Canopy Growth generated net revenue in the fourth quarter of $94 million. Total quantity of cannabis sold during the fourth quarter of fiscal '19 was 9,300 kilograms, up 270% from last year. At the same time, average price per gram decreased from $8.43 per gram to $7.49 per gram as the recreational channel opened up and the business model shifted more toward business-to-business with a wholesale tier at the provincial level. Oil and softgel capsules accounted for 40% of gross revenue in the fourth quarter of fiscal '19, up from 21% in the fourth quarter of fiscal '18.
Gross recreational revenue in the fourth quarter of fiscal '19 was $69 million. Gross medical sales totaled $13 million in the fourth quarter and Canadian medical revenue was $12 million. Medical sales in the fourth quarter included international sales of $1.8 million, down from $2.4 million in the prior year period, and this decrease is due primarily to supply constraints. We believe the supply constraints and limited medical sales in Q4 have been resolved by higher finished product inventory levels, and we expect finished product inventories to increase further in Q2 fiscal '20 as a result of the large harvest in the current quarter. Other revenues generated in the fourth quarter of fiscal '19 accounted for $24 million, up from $0.9 million in the prior year.
Turning my attention to gross margin. As a reminder, the cost of sales includes the impact of operating costs of cannabis cultivation subsidiaries not fully utilized, including specific zones of Aldergrove and Mirabel green houses as well as costs associated with developing and laboratory testing edible and beverage products, for which markets will be available later in calendar 2019.
我想花点时间回顾一下19财年第四季度的精选财务运营指标。 Canopy Growth在第四季度产生了9400万美元的净收入。 19财年第四季度出售的大麻总量为9,300公斤，比去年增加270％。与此同时，随着休闲渠道的开放，每克平均价格从每克8.43美元降至每克7.49美元，商业模式更多地转向企业对企业，省级批发层。石油和软胶囊在19财年第四季度占总收入的40％，高于18财年第四季度的21％。
Gross margin in the fourth quarter of fiscal '19 before the IFRS fair value impacts was $15 million or 16% of net revenue. Comparatively, gross margin in the fourth quarter of fiscal '18 was $7.7 million or 34% of net revenue. The lower gross margin percentage in the fourth quarter of fiscal '19 was primarily attributed to $24 million of operating expenses for facilities not yet cultivating or facilities that had underutilized capacity. In addition, in the fourth quarter, we incurred some nonrecurring costs, including costs related to unusual weather event in B.C.
Excluding these costs associated with underutilized assets and nonrecurring expenses, the gross margin before the fair value impacts and cost of sales and other inventory charges was $39 million or 41% of sales. With utilization increasing in these facilities, we expect our operating cost to normalize in the next several months as we work through seed to sale. However, as a reminder, start-up costs related to advanced manufacturing and our new bottling plant will continue to serve as a slight headwind, but will become less material as our revenue increases. We believe we are on a path for reported gross margins to be above 40% by the end of the fiscal year and will increase further in the future with higher efficiencies and increased sales of value-added products as we approach full utilization of the new production capabilities.
Finally, to recap, Q4 adjusted EBITDA amounted to a loss of $98 million as compared to a loss of $22 million in the fourth quarter of fiscal '18. The increase in the loss is largely reflective of the investments made through fiscal '19 in the areas of sales and marketing and general and administration expenses as well as research and development.
Total other expense was $135 million in the fourth quarter of fiscal '19 as compared to $11 million in the prior year quarter. The increased expense is partially due to a noncash expense of $163 million related to fair value changes on our senior convertible notes, which have been recorded through our consolidated statement of operations. These fair value changes are due to the increase in Canopy Growth stock from December 31, 2018 through March 31, 2019.
Our net loss in Q4 fiscal '19 inclusive of fair value impacts of biological asset accounting as well as other noncash items was $323 million as compared to a net loss of $54 million in fiscal '18 Q4.
Moving beyond fiscal year '19 and into the first quarter of fiscal '20, I wanted to highlight two items. Number one, as previously addressed in our shareholder circular related to the Acreage deal, we agreed to a modification to the investor rights agreement with Constellation Brands. The new investor rights agreement has two modifications related to the exercise price of their warrants as well as the expiration date of their warrants, both of which are subject to fair value adjustments, which will be recorded in Q1. As a result, we expect to record a material noncash charge in Q1 related to these adjustments, which will contribute to a material net loss in the period.
Number two, our harvest continues to increase quarter-on-quarter, which will support our view on revenue growth in coming quarters. But our Q1 harvest, although substantial, will largely be sold in Q2 and Q3 due to the timing of post-harvest processing, value-add product manufacturing and the timing of laboratory testing and the associated quality assurance release process.
For my remaining remarks today, I would like to take a moment to speak about the priorities I have established for myself, my team and by extension Canopy. We are passionate about driving performance improvement and executing on our mission statement with a commitment to operational excellence. And as successful as we've been, we need to continue to challenge ourselves as a company to build out our success and to enable a truly global platform that will fuel growth as we chart our course over the next several years.
So let me share my Top 3 priorities for building on these capabilities. Number one, we're going to review our global ERP strategy. Having just rolled out our new ERP system last fall, it may seem unusual to be discussing this so early, but we believe it's important that we take a step back to ensure that we have a scalable, world-class solution to support our business end-to-end not just for today but for tomorrow and beyond.
Number two, we're going to strengthen financial reporting and controls. To be a global leader, we must operate around the world seamlessly. We plan to design and implement a set of fully integrated capabilities that will allow us to manage risk, provide improved controls to our business, all while meeting our stock's compliance obligations. As our business evolves, so too will our financial reporting. We are already reengineering our financial reporting processes. We are in the early stages of planning for what is an eventual conversion to U.S. GAAP reporting anticipating that we will no longer qualify as a foreign private issuer in the future. We're also evaluating a reporting methodology which could lead to changes in how we communicate our performance to investors.
Number three, we're going to accelerate acquisition integration. Essential to our growth plan is our ability to acquire companies that enhance our reach into global and vertical markets. In our industry, many of these target companies have relatively nascent or immature capabilities from a business and technology perspective. Having a turnkey M&A playbook will improve our ability to acquire and integrate, which will improve our deal synergies, reduce our costs and fuel our growth more effectively.
In summary, this plan allows us to create a platform that supports scalable growth, fuels our expansion into the U.S. and beyond, it empowers our employees with the advanced tools and capabilities to develop business insights that allow us to seize market opportunities and provides a continue and repeatable basis for reporting to our shareholders and the financial community. I will provide updates on future calls as we progress toward this agenda.
因此，让我分享我在构建这些功能方面的三大优先事项。排名第一，我们将审查我们的全球ERP战略。刚刚在去年秋天推出了新的ERP系统，这么早就讨论这个问题似乎并不常见，但我们认为我们退一步确保拥有可扩展的世界级解决方案以支持我们的业务结束非常重要 - 不只是为了今天，而是为了明天和以后。
This concludes our review of the financials for the fourth quarter and fiscal year ended March 31, 2019.
I would now like to turn the call back to Bruce for some closing remarks.
Thank you, Mike. Excellent summary. So where we are now midway through near the end of Q1, we continue to look at the world quite optimistically. We're seeing indications of change in so many countries, and we feel we're the best positioned company to pursue them. So please, if you have questions, queue them in, and we look forward to responding.
谢谢你，迈克。 优秀的总结。 因此，我们现在正处于接近第一季度末的中途，我们继续非常乐观地看待这个世界。 我们看到许多国家都有变化迹象，我们觉得我们是追求这些变化的最佳公司。 所以，如果您有疑问，请排队，我们期待回复。
[Operator Instructions]. Your first question comes from Chris Carey with Bank of America.
[操作员说明]。 您的第一个问题来自美国银行的Chris Carey。
So, I just wanted to start with a bigger picture question, then I have a follow-up on near-term dynamics. So on the big picture, just, I guess, taking a step back on the results this quarter, clearly Canopy continues to invest globally to establish these long-term competitive advantages, and I think that makes a lot of sense, especially given peers don't really have anywhere near the same capability given your scale and balance sheet, right? But I guess as you continue to enter new markets, you will, of course, need to keep investing. So in that context, I think maybe it would be helpful to get your perspective on this natural tension between investing into the long term versus the need to have some of the near-term discipline? And how do you think that strategy impacts your financial model over the next 3 to 5 years?
所以，我只是想从更大的图片问题开始，然后我对近期动态进行跟进。 因此，从全局来看，我认为，在本季度的结果上退一步，显然Canopy继续在全球范围内投资以建立这些长期竞争优势，我认为这很有意义，特别是考虑到 考虑到你的规模和资产负债表，真的有任何接近相同的能力，对吗？ 但我想当你继续进入新市场时，你当然需要继续投资。 因此，在这种情况下，我认为对于长期投资与需要一些近期纪律之间的这种自然张力的观点可能会有所帮助吗？ 您认为该策略在未来3到5年内如何影响您的财务模型？
Yes. So it's a good question. So part of the reason Mike put out as one of his reporting prior years is to be able to give some segmented reporting because we do need to be able to show you exhibit A, which is going to be Canada. How is it running on medical, how is it doing on rec, what does it looks like on a total business, back out some of the costs, which aren't really directly related to cannabis income, medical programs, expenses of that nature. And then as we go into other geographies, we mentioned, I think, in our press release earlier this week about -- on approaching Colombia where we have a partner who will be producing our gel caps because as we get more IP, we can move up the value chain, use other parties' manufacturing capabilities and really put together our differentiated outcomes in the research. Maybe the final part is with signal to the market that we're quite interested in some form of instrument, which will allow us to take and rotate the invested capital in Canada, call it $1 billion plus and turn that into some form of an instrument, which, under the right scenario, should also become a scheduled type instrument so that if we got a federal permission in a foreign geography for another license that we'd actually be able to take that asset, put it on, have the cash rotate back in. And we've advanced quite a few of the models on that. I don't think it's something you'll see turned up instantly, but there is quite a lot of interest in how we could actually get that capital back into rotation versus stranded.
是。所以这是一个很好的问题。因此，Mike在前几年的报告中提出的部分原因是能够提供一些分段报告，因为我们确实需要能够向您展示展览A，这将是加拿大。它是如何在医疗方面运行的，它如何在rec上进行，它在整个企业中看起来是什么样的，退还了一些与大麻收入，医疗计划，这种性质的费用没有直接关系的成本。然后，当我们进入其他地区时，我认为，我们在本周早些时候的新闻稿中提到 - 在接近哥伦比亚，我们有一个合作伙伴将生产我们的胶帽，因为随着我们获得更多的IP，我们可以移动在价值链上，利用其他方的制造能力，真正将我们在研究中的差异化成果结合起来。也许最后一部分是向市场发出信号，我们对某种形式的工具非常感兴趣，这将允许我们在加拿大投资和轮换投资资本，称之为10亿美元以上并将其转化为某种形式的工具，在正确的情况下，也应该成为预定类型的工具，这样如果我们在国外地理位置获得联邦许可，我们实际上可以获得该资产的另一个许可证，请将其投入，让现金轮换我们已经推出了相当多的模型。我认为这不会立即出现，但我们对于如何实际将资金重新投入轮换与搁浅相比有很大的兴趣。
Okay. And then just on the follow-up. So your ability to kind of hit this $1 billion annualized run rate revenue by your fiscal Q4 2020. How much of that is dependent on the launch of new product forms in Canada? And maybe how much will you need from revenues outside of Canada to help you get to that number?
好的。 然后就是后续行动。 因此，您有能力在2020财年第四季度达到10亿美元的年度运营收入。这在多大程度上取决于加拿大新产品形式的推出？ 也许您需要从加拿大境外的收入中获得多少才能帮助您达到这个数字？
Yes. So that is a figure that was put out by Constellation, which we certainly feel is achievable. It's principally a domestic-driven opportunity. It doesn't -- our growth in revenue plans, we haven't built a material sum coming out of, say, hemp-derived products in America. We're looking at Canada as a market that principally drives the biggest number top line growth over the next three quarters. And what we see in the market, the biggest risk and uncertainty we have was, one, is the launch date, so we now know that and then our ongoing continuous risk assessment is approvals by the regulator. So, so long as Health Canada continues to approve the platform necessary to produce the products, we think we have the technology and the platform created. But with those things together, we think there is a substantial business in Canada with a little bit support from other geographies.
是。 所以这是Constellation推出的一个数字，我们当然觉得这是可以实现的。 它主要是一个国内驱动的机会。 它没有 - 我们的收入计划增长，我们还没有从美国的大麻衍生产品中获得一笔物质。 我们将加拿大视为一个主要推动未来三个季度增长最快的市场的市场。 我们在市场上看到的最大的风险和不确定性是，发布日期，所以我们现在知道，然后我们持续的持续风险评估是由监管机构批准的。 因此，只要加拿大卫生部继续批准生产产品所需的平台，我们就认为我们已经创造了技术和平台。 但考虑到这些因素，我们认为加拿大有大量业务，其他地区也有一些支持。
Next question comes from Vivien Azer with Cowen.
So, Mike, my first question to you, please. I really appreciate the detail on the gross margin. Given the commentary around the shift in kind of revenue into 2Q and 3Q based on what you cultivated in 1Q and the target to get that north of 40%. Can you offer any kind of incremental color on the cadence of that over the course of the year? It sounds to me that our expectation should be reset materially lower for the first quarter as we kind of push out gross margin improvement. If you comment on that, that would be great.
所以，迈克，请问我的第一个问题。 我非常欣赏毛利率的细节。 鉴于围绕第一季度和第三季度的收入变化的评论，基于您在第一季度培育的收入以及达到40％的北方目标。 你能否在一年中的节奏上提供任何增量色彩？ 听起来我们的第一季度我们的预期应该会大幅下调，因为我们会推动毛利率的改善。 如果你对此发表评论，那就太好了。
Yes. Thanks for the question, Vivien. Yes. So, there has been a lot of activity going on at our big anchor facilities, BC Tweed as well as Mirabel and we are on the tail end of the renovation, retrofitting of those facilities. And given the grow time, it takes time to kind of claw your way back. So we would expect that as we get into Q3 to Q4, that you start to see those normalized margins that we've been talking about for some time now. There will be a bit of a headwind, albeit relatively smaller than the headwind we've seen on the grow houses, but as the bottling capabilities are stood up, there will be some fixed costs that we will hit ahead of production, ahead of revenue, but all things being equal, I think it's going to be a much more modest impact than what we've experienced in the last two quarters with the grow houses. So we remain very optimistic that we'll get to the 40% by Q4. And as we start to see the benefits of the new platforms, in my view, that's where we get the runway to that high 40s that we've talked about for quite some time.
Perfect. That's really helpful. And then for both of you, Bruce and Mike, this is a follow-up to that. Can you comment on how that like influences your view on the EBITDA and getting to positive EBITDA? Obviously, the story has changed pretty materially in the 2.5 years that, Bruce, I've been covering the stock. But there was a time when you guys were talking about getting to EBITDA positive once you had adult-use revenues hitting the P&L, now I fully appreciate that with the incremental capital that you've gotten from Constellation Brands, you've made some adjustments to your investment priorities that are impacting EBITDA, but the magnitude of the increase in your EBITDA loss has really dwarfed anything we're seeing from your peers and you guys are not the only one trying to scale up those domestically and internationally. So any help on kind of the glide path to EBITDA profitability would be great?
完善。 这真的很有帮助。 然后对你们两个人，布鲁斯和迈克来说，这是对此的后续行动。 您能评论一下这会影响您对EBITDA的看法并获得正EBITDA吗？ 显然，这个故事在2.5年内发生了相当大的改变，布鲁斯，我一直在报道这个股票。 但有一段时间，当你们有成人使用收入达到损益表时，你们正在谈论获得EBITDA积极性，现在我完全意识到，你从Constellation Brands获得的增量资本，你已经做了一些调整 对于影响EBITDA的投资优先级，但EBITDA损失增加的幅度确实使我们从同行看到的任何东西都相形见绌，而你们并不是唯一一个试图在国内和国际上扩大规模的人。 因此，任何有关EBITDA盈利能力下滑途径的帮助都会很棒吗？
Yes. And you're right, it does dwarf our peers and it all comes back to the war chest that we talk about which we think is going to turn into a competitive advantage over time as we're building this global scale. But I'll bring it back to Canada. Our focus in the near term is to demonstrate Canada performs as a stand-alone model that we can take around the world. And in FY '21, we believe we're on a path to show EBITDA positive performance. And with the announcements, with the new regulations coming out with the platforms and the capabilities that we stood up from a production perspective, we're confident that as we get into fiscal '21, you'll start to see that positive EBITDA performance for Canada as a stand-alone business.
是。 而且你是对的，它确实使我们的同行相形见绌，这一切都回到了我们谈论的战争时期，我们认为随着时间的推移，随着时间的推移，我们正在建立这样的全球规模。 但我会把它带回加拿大。 我们近期的重点是展示加拿大作为我们可以在世界各地采取的独立模式。 在21财年，我们相信我们正在展示EBITDA的正面表现。 随着公告，随着平台的新规定以及我们从生产角度出现的能力，我们相信，当我们进入21财年时，您将开始看到EBITDA的正面表现 加拿大是一个独立的企业。
Next question comes from Peter Sklar with BMO Capital Markets.
下一个问题来自BMO Capital Markets的Peter Sklar。
Mike, there was a number you -- a harvest number you threw out there 34,000 kilograms. I didn't quiet catch that in the pace of your commentary. Can you just talk a little bit about what that represents and when that will sell-through?
迈克，你有一个数字 - 你在那里扔出的收获数字是34,000公斤。 我没有在你评论的节奏中保持沉默。 你能谈一谈这代表什么以及什么时候会销售？
Sure. S,o 34,000 kilograms is our current forecast for Q1 harvest, and this is really driven by the fit out of all of our grow houses. Recall, if you go back and look at the last couple of quarters of harvest, I think, in Q2, we had about 15,000 kilograms. In Q3, we harvested around 7,500 kilograms. Q4, 14,400 kilograms. You sort of get a sense of the depth that incurred as we were putting those facilities through the retrofitting. So, 34,000 kilograms is, I would say, the beginning of what I would consider to be our new normal of harvest capacity. And I would also say that our operations teams are committed to progressing that number even further, and that's going back to my remarks of transitioning from establishing the facilities and getting everything up and running to really focusing on optimization. We've got a lot of runway in front of us to further optimize these facilities. And going back to Vivien's question, and earlier questions around gross margin and EBITDA, getting these facilities optimize is going to be a critical value lever for driving that bottom line. Because as the throughput increases, your fixed costs are relatively fixed, you might have some marginal costs on that higher throughput with some additional hourly labor. But as you guys know, these facilities are highly fixed cost in nature. So that's really where the power of that leverage is going to come through.
当然。 S，o 34,000公斤是我们目前对第一季度收获的预测，这实际上是由我们所有种植房屋的装修所驱动的。回想一下，如果你回去看看收获的最后几个季度，我认为，在第二季度，我们有大约15,000公斤。在第三季度，我们收获了大约7,500公斤。 Q4,14400公斤。当我们将这些设施用于改造时，您可以了解所产生的深度。因此，我想说，34,000公斤是我认为是我们新的正常收获能力的开始。而且我还要说我们的运营团队致力于进一步推进这一数字，并且这又回到了我从建立设施并使一切运转到真正专注于优化的过渡。我们面前有很多跑道来进一步优化这些设施。回到Vivien的问题，以及之前关于毛利率和EBITDA的问题，优化这些设施将成为推动这一利润的关键价值杠杆。因为随着吞吐量的增加，您的固定成本相对固定，您可能会在更高的吞吐量上获得一些边际成本，并且需要额外的小时工。但是你们知道，这些设施本质上是高度固定的。所以这就是杠杆的力量将来临的地方。
And, Peter, serving the modeling of it, typically the way I look at is like 2/3 of the sales in the next quarter come from the harvest in the prior quarter. So when you see that number, you can start to work it into -- if we got the right product mix and the stores are opening up, that harvest number from this quarter is a big key factor for the next quarter.
而且，彼得服务于它的建模，通常我看待的方式就像下个季度的2/3销售额来自上一季度的收获。 因此，当您看到这个数字时，您可以开始研究它 - 如果我们得到了正确的产品组合并且商店正在开放，那么本季度的收获数量是下一季度的一个重要因素。
Okay. So really just putting it altogether it's this -- now that you've achieved this higher level of harvest, that's why you are optimistic about the margin improvement in Q3 and Q4, is that correct?
好的。 所以真的只是把它完全放在一起 - 现在你已经实现了更高的收获水平，这就是为什么你对第三季度和第四季度的利润率改善持乐观态度，这是正确的吗？
Yes. It's utilization of the platform. So as the building fills, we get the yield off the building. And as the product formats become more sophisticated, you sell a lot less. When you measure everything in milligrams, you sell less cannabis with more adjacent ingredients to create more value and you get to put it into the form factors of vapes to beverages to chocolates. That mix, combined with our platform utilization turns into a great outcome. And why it is like is, like what we've observed in the last five years the creation of opportunity that I don't think we are ever going to see for anybody on these phone calls in your life time. This is a once-in-a-lifetime window. And so this model that we've developed and how we're deploying it globally with tunning it in Canada. I think, we are very well positioned and the capitalization we have allow us to have multiple years of advantage if we spend properly now which we are. And so that's kind of a path we're driving.
是。 它是平台的利用。 因此，当建筑物填满时，我们可以从建筑物中获得收益。 随着产品格式变得越来越复杂，您销售的产品要少得多。 当你以毫克为单位测量所有东西时，你会销售更少的大麻和更多的相邻成分以创造更多的价值，你可以把它变成vapes到饮料和巧克力的形状因子。 这种组合与我们的平台利用率相结合，成为一个伟大的结果。 为什么它就像我们在过去五年中所观察到的那样，创造机会，我认为在你的一生中，我们不会在这些电话中看到任何人。 这是一个千载难逢的窗口。 所以我们开发的这个模型以及我们如何在加拿大全球范围内进行调整。 我认为，如果我们现在正确地花钱，我们的定位和资本化使我们能够拥有多年的优势。 所以这就是我们驾驶的道路。
Okay. And my other question is, I believe, your recreational sales, if you look in kilograms not revenues, but kilograms, declined Q4 versus Q3. And is that because like you just didn't have the production in Q4 or rather is just that the retail flow -- like the retail demand isn't out there because Ontario and Alberta just haven't been building their store base?
好的。 而我的另一个问题是，我相信，你的娱乐销售，如果你看公斤而不是收入，但千克，第四季度与第三季度相比下降。 这是因为就像你刚刚在第四季度没有生产，或者只是零售流程 - 就像零售需求不在那里因为安大略省和艾伯塔省还没有建立他们的商店基地？
That's one of those questions is a bit of both we're talking that -- it's a couple of percent down, but it's really been about product mix that we had. Because this is -- second quarter we had about -- two quarters or three quarters that get ready for the first launch quarter, and we had to keep supplying through so that whole half product and why the prior question the available product for Q3 matters or Q2 matters. But obviously when Alberta needed to pause in their opinion the additional licensing of stores and Ontario got going in April, that kind of made the platform static. What we're seeing is a lot more stores opening up obviously in Alberta. There is quite a bit of discussion and rumor about will Ontario do some more sooner. So the channel is growing, and we are pretty upbeat that, that channel is going to have more and more interesting products and it's going to a big channel by the time we get to Q3, Q4. So a little bit of a blend.
这是其中一个问题，我们正在谈论这两个问题 - 它减少了几个百分点，但它确实是关于我们的产品组合。 因为这是 - 第二季度我们有大约 - 两个季度或者四个季度为第一个发布季度做好准备，我们必须继续供应以便整个半成品以及为什么先前的问题可用于Q3的产品或 Q2很重要。 但显然，当艾伯塔省需要暂停他们的意见时，商店和安大略省的额外许可将在4月份开始实施，这种平台让这个平台保持不变。 我们看到的是在阿尔伯塔省开设的商店明显多了。 有很多关于安大略省会更早做些什么的讨论和谣言。 因此渠道正在增长，我们非常乐观地认为，该渠道将会有越来越多有趣的产品，当我们到达Q3，Q4时，它将成为一个大渠道。 所以有点融合。
Next question comes from Oliver Rowe with Scotia Capital.
接下来的问题来自于与Scotia Capital的Oliver Rowe。
So your International sales this quarter were pretty low, and I know that, that business is a bit lumpy by nature. But it seems apparent that we haven't hit the inflection point for growth in these markets yet. Many countries prescribe cannabis as a last resort and only for very serious indications and a bit relaxing to see regulatory change. So from your seat, I'm just wondering how quickly you see that change happening and sort of what we could expect to see in the next couple of years in your international segment?
因此，本季度您的国际销售额相当低，我知道，这项业务本质上有点粗糙。 但很明显，我们尚未达到这些市场增长的拐点。 许多国家规定大麻是最后的手段，仅用于非常严重的适应症，并且看到监管变化有点放松。 所以，从你的座位上，我只是想知道你看到这种变化的速度有多快，以及我们在你的国际市场中未来几年可以看到的情况？
Yes. So it's a bit textured and that the U.K. is still at that stage where they are making extremely challenging for patients typically very ill young children to gain access and then it is extremely costly. And so what they are effectively doing is fighting in the media with sick children and that obviously won't work for a long time, so it's starts to open up. If you move across the opportunity, you will get to Germany as the most available. And frankly in the period we're reviewing, it was a function of not having the product to export, because you just can't say I'm going to send this to Germany. It needs to be actually the product, which has been fined and registered and we didn't have sufficient. We think that we do now and that we're in a position where that should grow because the demand is there. We also have places like Denmark coming online, which means the export potential will be from a Denmark production facility into, say, Germany or the Czech Republic. And so our transiting of cannabis will become a bit more textured, not just Canadian and I expect to see that over the next quarter or so. But really the markets seem to be growing. It really has been our ability to keep up with the right product mix and now we're further working to have things like gel caps and oils approved as exportable products. Not done yet, but it has been an aggressive project to get there. So I think, you might see the mix of products improve not just the available product.
That make sense. I just have a follow-up. I know you just mentioned there that you have to get certain products availability for export. I know the export markets are offering you about 2x better price than the recreational market. So why are you not just focusing on getting products through that channel to realize those prices?
有道理。 我只是跟进。 我知道你刚刚在那里提到你必须获得某些产品可供出口。 我知道出口市场为您提供的价格比休闲市场好2倍。 那么，为什么你不只是专注于通过该渠道获得产品来实现这些价格？
Yes. It was a bit of a juggling act. I would say that the regulators probably were little bit more supportive recently of approving things from Canada over our ability to grow and target that amount. It has been improved because of the platforms items we described. It was a small window where we're probably juggling eight balls, and I would say that we didn't get to sort of utilize everything the way you would optimize for cash, but I think we're pretty much there right now. On a receiving side in Germany, it's an interesting thing and that we have a capacity constrained to some extent where what we can receive has to sell-through before we can put more and we don't have like a 10-ton vault there. We have a limited capacity vault. So we're always adjusting the choke point, but I think the choke point will be more that than it would be product mix or available product.
是。 这是一个杂耍的行为。 我想说监管机构最近可能会更加支持加拿大对我们增长和定位这一数额的能力的批准。 由于我们描述的平台项目，它已得到改进。 这是一个小窗口，我们可能会玩八个球，而且我会说我们没有按照您优化现金的方式利用一切，但我认为我们现在几乎就在那里。 在德国的接收方面，这是一个有趣的事情，我们的容量在一定程度上受到限制，我们可以获得的东西必须在我们可以投入更多之前进行销售，而我们在那里没有像10吨的金库。 我们的容量有限。 所以我们总是调整阻塞点，但我认为阻塞点将比产品组合或可用产品更多。
Next question comes from Graeme Kreindler with Eight Capital.
下一个问题来自Graeme Kreindler和Eight Capital。
I just wanted to go back quickly to the 40% gross margin target you are expecting by the fourth quarter optimistic to reaching that. You had some competitors mentioned on recent calls. The expectation that there could be some significant downward pricing pressure on the flower side of the market with more capacity coming online, especially from smaller producers. So I was just wondering if that target there takes into consideration, any headwinds on the flower side considering or probably remain a significant part of the market near to medium term?
我只想快速回到第四季度预期的40％毛利率目标，并乐观地达到目标。 你最近的电话中提到了一些竞争对手。 预计市场上可能存在一些重大的价格下行压力，其中更多的产能将上线，特别是来自小型生产商。 所以我只是想知道这个目标是否考虑在内，花卉方面的任何不利因素考虑或可能仍然是市场接近中期的重要部分？
Yes. It does. Our expectation of how much and how quickly it comes onstream, I think, might be informed by our experience. I would also say that there is a very different -- big difference between growing some bug quality versus producing an API extract kind of level and getting things into a form factor that actually rely on a bottling plant or vape technologies we've created or the chocolate factory area that's licensed. So I think if you're going to be measuring things on grams, there maybe some pressure and I don't think it's in the time period you've described on grams. But when you start measuring things in milligrams, I think, the milligram formatted product is medical direct are actually going to have a very solid opportunity for margin increase.
是。 确实如此。 我认为，我们对其生产的速度和速度的期望可能会受到我们的经验的启发。 我还要说有一个非常不同的 - 在增加一些bug质量与生成一个API提取物类别之间的巨大差异，并将事物变成一个实际上依赖于我们创建的装瓶工厂或vape技术或者 获得许可的巧克力工厂区。 所以我认为如果你要用克来测量东西，可能会有一些压力，我不认为这是在你描述克的时间段内。 但是当你开始用毫克来衡量一些东西时，我认为，毫克格式的产品是医疗直接的，实际上将有一个非常可靠的机会来提高利润率。
Okay. And a follow up on the subject of higher-margin products and to follow-up from the last set of questions around the export. The press release mentioned a pretty lengthy process to get export approval. So I was just wondering if the regulator has started to streamline any of those processes? Or they are taking input from you or other producers in order to help that go a bit faster?
好的。 并对高利润率产品的主题进行跟进，并对围绕出口的最后一组问题采取后续行动。 新闻稿提到了获得出口批准的漫长过程。 所以我只是想知道监管机构是否已经开始精简这些流程？ 或者他们正在接受您或其他制作人的意见，以帮助提高速度？
I think the regulator's objective is to make sure that every patient in Canada has full access to product and the provinces have what's necessary. And then exports have to go where the receiving country requests and Canada issues an export. I think it's becoming smoother, but it isn't -- I don't think it's never going to be something in our short-term window, maybe the next several years where it's automatic. We'll see where we get with CBD. But if you start including the ingredient THC, it does become a complicated process. Really what you can do now as we have scale production, the quantities, which we can put through. It doesn't matter if you're doing 250 kilograms or 25 kilograms, essentially the overhead rates are both the same. And so I think we're finding ways to just put a little bigger volume through each approval.
我认为监管机构的目标是确保加拿大的每位患者都能充分获得产品，各省都有必要。 然后出口必须到达接收国要求和加拿大出口的地方。 我认为它变得更加平滑，但事实并非如此 - 我不认为它在我们的短期窗口中永远不会成为某种东西，也许是未来几年它会自动化的。 我们将看到CBD的位置。 但如果你开始加入成分THC，它确实会变成一个复杂的过程。 真的，你现在可以做什么，因为我们有规模生产，数量，我们可以通过。 如果你做250公斤或25公斤并不重要，基本上开销率都是一样的。 因此，我认为我们正在寻找方法，通过每次批准只增加一点量。
Your next question comes from Doug Miehm with RBC Capital Markets.
你的下一个问题来自RBC Capital Markets的Doug Miehm。
Couple of questions. Just with respect to the rollout later this year. How would you see that the provinces are set up relative to what we saw last year in terms of the value-add products and the capabilities in that regard?
几个问题。 就今年晚些时候的推出而言。 您如何看待这些省份相对于我们去年所看到的增值产品和这方面的能力？
Good question. And in a word much better, right. Like last year at this time, we were still trying to talk about what's the start date. Now we're talking about whether or not they wired their buildings to have fridge plug. So for example, when you go to New Brunswick, those stores and the provinces are actually put in the capital so that they've contemplated the ability to have chilled fridges. They have more storage capacity. When you look across the private sector ones I think they react quite quickly. So I wouldn't say it's even, but I would think that there is probably half the provinces in which we'll be able to launch quite quickly with a full range of products and the others which will be catching up based on the fact that they could be making a lot more rate-of-return on their buildings if they had all the products in. And so not uniform but way better than where we were. And I think the products that they are talking about are critical to be in a store.
If you look at the e-commerce rate for liquor sales, it's not super high. But if we have a beverage on a store floor and say, Nova Scotia liquor, which I mentioned it many times sort of I was down there in the last few months. You essentially walk in the front door of the liquor store and then at the back of the store in sort of a semi-separate areas where they sell the cannabis. If you pick up a bottle of wine and walk through to the cash at the back, you can pick cannabis and pay for both at the same spot. And so we're quite optimistic that some of those platforms are going to be able to show substitution effect in accelerated sales. But overall, I think, half or more are going to be quite quick to launch.
Okay. And then the other question I had is just with respect to the testing process, which, I think, you briefly mentioned. Are the hurdles in your mind different as it relates to the value-add products and edibles et cetera versus what we've seen before? And do you believe there are any different implications for that process versus what we saw last year?
好的。 然后我遇到的另一个问题就是测试过程，我想，你简要提到过。 您认为与增值产品和食品等相关的障碍与我们之前看到的不一样吗？ 您是否相信这一过程与我们去年所看到的有何不同？
Yes. So I think what you were still waiting to see what the final criteria in testing process will be, but it's narrowing in. And that's -- we are frankly -- I think, when they're looking at this, it's going to be part of what we've observed in the U.S., where we tested a great range of CBD products and about 80% of them were more than 10% in that respect. So I think the regulators are going to be looking very, very carefully that you can actually confirm both the cannabis dosage and the quality of the product that you're mixing with whether it's food-type product or food-testing platform. It certainly doesn't feel like it's going to be a stretch to deliver, but it doesn't nail down yet as a final step.
是。 所以我认为你还在等着看测试过程中的最终标准是什么，但它正在缩小。那就是 - 我们坦率地说 - 我认为，当他们看到这个时，它将成为其中的一部分 我们在美国观察到的情况，我们测试了大量的CBD产品，其中约80％的产品在这方面超过10％。 因此，我认为监管机构将会非常非常仔细地确认您无论是食品类产品还是食品测试平台，您都可以确认大麻的剂量和产品的质量。 它当然不会让它成为一个延伸，但它还没有作为最后一步。
Next question comes from Michael Lavery with Piper Jaffray.
下一个问题来自Michael Lavery与Piper Jaffray。
I just wanted to touch on a couple of your newer platforms coming in and understand some of the timing there. First for the U.S. for the CBD initiatives and hemp products [indiscernible] by the end of fiscal '20. Can you just give us a sense of how that builds in and may be why it's not something sooner? And then second on the second wave of products coming in Canada. Obviously there is some regulatory issues around all the timing. But how much should we expect pipeline fill in calendar fourth quarter even if there is mid-December date there really sort of the green light. How should we think about how that looks in terms of you getting product out of the door?
我只是想触及你的几个新平台，并了解其中的一些时间。 首先是美国的CBD计划和大麻产品[音频不清晰]到20财政年度结束。 你能告诉我们它是如何建立起来的，并且可能是为什么它不是更快的东西？ 然后是加拿大第二波产品的第二波。 显然，所有时间都存在一些监管问题。 但是，即使在12月中旬的日期，我们还应该预计第四季度的管道填充量是多少呢？ 我们应该如何看待您如何将产品推向市场？
Yes. So there is a certain amount of stuff that I'm going to keep a little bit close to the vest and that we think there is a competitive advantage in what we're doing. But take New York for example, in Kirkwood, we've assembled the property and the facility. We're going to go in. We have issued the RFPs. We are focusing on local trades and contractors and engineers so that we can actually implement the platform that we already know how to implement. So that site will then become a processing CBD. We've contracted hemp in several states across the U.S. for production. We've defined all of our brand launch lines, think health and wellness principally. And we have found in our finding a variety of contract manufacturers who are putting the form factors together for us where we want to launch so as we don't want to have skis run out.
We don't want to have anybody have a fear of what's in the product and we want certainty that it's controlled. So even meetings with the USDA, what's the permissible spray? When did they test it? How do we make sure that the product when it's harvested from the field doesn't contain things that downstream are going to become viewed negatively in a state. And so what we're doing is assembling a scale reliable platform that is not going to leave any big box or C-store operators with an embarrassment, but rather an ongoing sellable SKU. And so it takes a little bit of time to do that at scale. Typically we try to push and deliver things a little earlier than our schedule rather than promise and fail. So, I think, we're operating in that mode right now.
And on the Canadian products coming in later this year?
So on those, it feels like we're landing finally where we want to be, right. Like we've been talking about beverages for 3 or 4 years. I think if you look back in the decks we've been using, we had a tweed and tonic with a clear bottle and a cap on it for a long time. We have a chocolate factory operating in what used to be a chocolate factory that became a marijuana factory, it has both now. We have done a lot of work on brands, form factors and launch. So I think you're going to like what we have for everything from how vape products work and how our margin model has been thought through on that through every other form factor. We are, I think, well ahead in terms of the facility, the space, the license for cannabis to be present. All we need is the final agreement that we can launch and typically that's going to be 60 days from the time of their exit, so mid-December. The principal challenge in 4Q is mid-December also has a late December event which can be Christmas or Hanukkah depending on who you are. And so there is a shipping window that's going to be limited and how much can get into stores. So our logistics will contemplate how may be we can direct ship to stores that can take it versus warehouses that have the inventory and then crank it up in queue for us calendar Q1. But those are sort of the things that we're already mapping out and here is only June.
Next question comes from Brett Hundley with Seaport Global.
下一个问题来自Brett Hundley和Seaport Global。
If I could just package two quick questions together. The first is, if the U.S. Senate follows health passage of the spending bill for the forward year, would your lawyers consider that a triggering event for the Acreage deal? And then separately, New York State has been really wet this spring. Do you have a sense for how CBD or hemp plant yields are impacted during late plantings? And can you share with us kind of what the situation is with regards to your company or I guess, partner farms?
如果我可以将两个快速问题打包在一起。 首先，如果美国参议院跟进了转发年度支出法案的健康通过，那么您的律师是否会认为这是一项针对种植面积交易的触发事件？ 然后另外，纽约州今年春天真的很湿。 您是否了解CBD或大麻植物产量在晚期种植中是如何受到影响的？ 你能和我们分享一下你们公司的情况，或者我想，伙伴农场？
To the questions, one, I would say is actually -- so recent news, we're still trying to figure out exactly where that came, right. Like it was yesterday's vote, I think the one you're referencing with regard to the DOJ budgets?
对于这些问题，我想说的其实是 - 最近的新闻，我们仍在试图找出确切的位置，对。 就像昨天的投票一样，我认为你就司法部的预算提到的那个？
That's exactly correct.
So that was last night's reading and discussion and calls around 9:00 at night because it does need to be supported by the Senate, but I don't know that, that makes it federally permissible. I think what it makes is federally unenforceable. And so we will see what we will get, but I think it's just a progression towards where we wish to be. But this is one of the things that we are monitoring extremely closely and we have people living in all the right ZIP codes so that they can be on that for us. As far as the second one, we're still getting the green light that the harvest will occur. Yes, it has been ridiculously east coast rainy. We do have hemp that we acquired from prior years that is into processing step, and we do have contracts in other geographies. Obviously, New York wants to see product produced in New York, say, processed in New York and branded to CBD in New York. But we certainly don't have any flags to throw yet at this time.
所以那是昨晚的阅读和讨论，并在晚上9点左右打电话，因为它确实需要得到参议院的支持，但我不知道，这使得它在联邦政府允许。 我认为这是联邦政府无法执行的。 所以我们会看到我们会得到什么，但我认为这只是我们希望成为的一个进展。 但这是我们非常密切关注的事情之一，我们让人们生活在所有正确的邮政编码中，以便他们可以为我们服务。 至于第二个，我们仍然得到收获将会发生的绿灯。 是的，东海岸多雨是荒谬的。 我们确实拥有从前几年进入加工步骤的大麻，我们在其他地区也有合同。 显然，纽约希望看到在纽约生产的产品，比如说，在纽约加工，并在纽约标榜CBD。 但是我们当时肯定没有任何标志要扔掉。
Next question comes from Ryan Macdonell with GMP Securities.
Mike, welcome to the conference call. So my first one is maybe for you, Mike. You talked about how global and ex-Canada is really starting to be a large portion of your spend. Could you share with us in the quarter approximately what proportion of SG&A was attributed to outside of Canadian operations? Was it on the order 20% as much as 50%?
迈克，欢迎参加电话会议。 所以我的第一个也许就是你，迈克。 您谈到了全球和前加拿大如何真正开始成为您支出的很大一部分。 您能否在本季度与我们分享大约SG＆A在加拿大业务以外的比例？ 是订单的20％多达50％？
I'll let Mike see if he can dig around and get you a specific break. I don't think we haven't covered off. But I'll link it back to an earlier question on things like exports. And I mentioned how it gets textured. Someone was asking, is the export process from Canada to Germany accelerating? It is what it is, but may be in a quarter or two, our export process for Germany in some proportion relies on the Denmark authority. And so we do have fully competent resources in Europe to handle that kind of transaction where we grow it, we certify it, we execute the legal framework, paperwork and move it where it doesn't rely unnecessarily on a function at head office. So, Mike, I don't know if you have any more breakdown.
我会让迈克看看他是否可以挖掘并让你得到一个特定的休息时间。 我认为我们没有被掩盖。 但我会把它与早期的问题联系起来，比如出口。 我提到它是如何变形的。 有人问，从加拿大到德国的出口过程是否正在加速？ 它就是这样，但可能只有一两分钟，我们对德国的出口过程在某种程度上依赖于丹麦当局。 因此，我们在欧洲拥有完全有能力的资源来处理我们发展它的那种交易，我们对其进行认证，我们执行法律框架，文书工作并将其移至不必要地依赖总部职能的地方。 所以，迈克，我不知道你是否还有其他故障。
Yes. I'd say, when you think about our infrastructure outside of Canada, our SG&A, I put at the 10% to 15% range, but clearly an area of investment. The difficult thing in unpacking that is we are adding infrastructure in Canada to support a build-out of the global business for things like shared services, legal, finance, et cetera. But in the coming months and quarters, you will see more investment going into the U.S., going into Latin America, going into Europe as we build out those functions.
是。 我想说，当你考虑我们在加拿大以外的基础设施，我们的SG＆A时，我把它放在10％到15％的范围内，但显然是一个投资领域。 解包方面的难点在于我们在加拿大增加基础设施，以支持共享服务，法律，金融等等全球业务的扩建。 但在接下来的几个月和几个季度里，你会看到更多的投资流入美国，进入拉丁美洲，在我们建立这些功能时进入欧洲。
Excellent. Thank you very much for that color there. And maybe kind of following up on that, the thing in international, with regards to the U.S. you talked about the rollout of CBD products there. Maybe can you share with us what sort of categories you find are interesting? And also any comments you have around ingestible CBD products in south of the border?
优秀。 非常感谢你那种颜色。 也许有点跟进，国际上的事情，关于美国，你谈到在那里推出CBD产品。 也许您能与我们分享您认为有趣的类别吗？ 还有你对边境南部可吸收CBD产品的评论吗？
So turn a little bit sideways, what we really like our states to step in so we don't have to wait for FDA to govern in the dosage. You'll see many products out there that are full spectrum hemp and, let's say, 25 milligrams where they won't say CBD and they don't get into the details. So what we like is in New York state, we think we're going to have everything from the potential of a beverage to certainly skincare products and moving along that could in fact become ingestibles because at the state level, we expect them to regulate and they appear right if they regulate before FDA so long as we don't make health claims. And so I think you're going to find 5 or 6 states are going to govern very well that will allow companies like Canopy to put up infrastructure. Process to finish goods that can be topical for ingestible, drinkable as well and have the dosage on them. And so long as we do that, we will be in compliance with the state license and not offset with the FDA. So we don't think we're stuck in the topical swim lane only, but we think it's good category.
Next question comes from Owen Bennett with Jeffries.
First question, I just wanted to come back to the U.S. hemp CBD. So you spoke about the $1 billion sales run rate at the end of the year being largely Canadian driven. So U.S. hemp CBD obviously offers possible upside to that should it come online in 4Q. So just curious in terms of how much of a contribution can we expect U.S. hemp CBD to make in its first full year even in a very conservative scenario?
第一个问题，我只是想回到美国的大麻CBD。 所以你谈到了今年年底10亿美元的销售率主要是由加拿大人推动的。 因此，如果它在第四季度上线，那么美国大麻中央商务区显然可能有上升空间。 因此，即使在一个非常保守的情况下，我们可以期待美国大麻CBD在其第一个完整年度中做出多少贡献？
So in the first part of your question, you are correct that we are not leaning on revenue or sales from that category in order to actually see a high-growth company. We're investing a few $100 million into U.S. processing assets that are great for hemp. But they'll also be functional and I think scalable for cannabis should that become permissible activity. As far as the forward look, CBD doesn't resolve everything that's on the planet, So that perspective that you just say the letter CBD and everything is good. So whatever that really of the top number is, we don't buy into that. But I have seen analyst reports that this is substantial healthcare product set, and we think with what we're doing we should end up with a leading market share. And I don't want to lean to a number, but we're building for scale and trust. And if you're running a big box chain, a corner chain, you do not want another supplier, who is going to embarrass you.
因此，在您的问题的第一部分中，您是正确的，我们不依赖于该类别的收入或销售，以实际看到一个高增长的公司。 我们正在为美国大麻加工资产投入1亿美元。 但它们也将起作用，我认为大麻的可扩展性应该成为允许的活动。 就前瞻性而言，CBD并不能解决地球上的所有问题。所以，你只需要说出CBD字母和一切都很好的观点。 所以无论最重要的是什么，我们都不会接受。 但我看到分析师报告说这是一个重要的医疗保健产品组合，我们认为我们正在做的事情应该最终具有领先的市场份额。 而且我不想倾向于一个数字，但我们正在建立规模和信任。 如果你正在经营一个大型连锁店，一个角落链，你不想要另一个供应商，谁会让你难堪。
And then just a follow up, could you please give some more details on the usual weather event on over one-time activities impact the margins in the quarter? And how confident are you these one-time activities won't need to be repeated as we move through the year and obviously trying to get that 40%?
Yes. So couple of things there and Mike will chime in some. When you're retrofitting and secure pricing green houses you're not operating, so if you get a heavy snow in a sudden basis, it can actually become a problem, it did. We had to heat cranked up and things done, but when the greenhouses are full and operating their design but the snow load doesn't become a topic because it actually continuously melts off, check that box good there. As far as the other ones, Mike, I don't know if you want to comment. There is some specific things related to leases and such, which, I would say, are functions of startup and recreational when you're trying to figure out who, what, where, when fast and have options.
是。 所以有几件事情和迈克会在一些事情上发生声响。 当你正在改造并确保定价温室时，你没有运营，所以如果你突然遇到大雪，它实际上可能成为一个问题，它确实成了问题。 我们不得不开始加热并完成工作，但是当温室充满并运行他们的设计但雪负荷不会成为一个主题，因为它实际上不断融化，检查那个盒子好。 至于其他人，迈克，我不知道你是否想发表评论。 有一些与租赁等有关的具体事情，我想说，当你试图找出谁，什么，何地，何时快速并有选择时，这些是启动和娱乐的功能。
That's right, Bruce. I don't think anything is material in nature, but I would just say just as we're working through that retrofit to challenge to grow and operate at the same time that you're retrofitting, so we just had a number of small unusual activities occur during the quarter. Nothing systemic, nothing to be concerned about.
没错，布鲁斯。 我不认为任何东西本质上是物质的，但我只是说我们正在通过改造来挑战在你改造的同时成长和运作，所以我们只是有一些小的不寻常 活动发生在本季度。 没有什么系统性的，没什么值得关注的。
Next question comes from John Zamparo with CIBC.
This is actually Krishna Ruthnum on for John. I just wanted to follow up with regards to the pet CBD market, something that you mentioned in the past. Just to see whether you have an update on when products will be available and whether that will be in this calendar year?
这实际上是Krishna Ruthnum为约翰。 我只是想关注宠物CBD市场，这是你过去提到过的。 只是看看您是否有关于何时可以使用产品以及是否将在此日历年中更新的更新？
So we're looking at a couple of launch locations certainly for the ones we wish to launch in the U.S. We want to make sure that they are safe for the animal and valuable for the owner who pays for them. With that criteria and brands like Martha Stewart associated, I would say, our cautious window for launch is as late as Q1 calendar, Q4 fiscal. There maybe other products in Canada that could come on sooner. And again what we're trying to do is make sure that what we launch is easily supported by very large industrial players in the pet food space. So that we have brands and we have colleagues who could play with us that would see what we are doing as the best way and that appears to be the path we're on. It's been a -- we're dealing with how do we interact with the veterinary and pet carriers in both Health Canada and the FDA. We're trying to follow those kind of rules and platforms, and it feels like we're well down the path. But I wouldn't want to tell you that it's calendar Q4, it's more likely calendar Q1 and Q4 fiscal for the pets.
因此，我们正在寻找一些我们希望在美国推出的发布地点。我们希望确保它们对动物是安全的，对于支付它们的所有者来说是有价值的。我认为，根据这一标准和玛莎·斯图尔特这样的品牌相关，我们谨慎推出的窗口是第一季度的第四季度。加拿大可能还有其他产品可以更快上市。我们要做的就是确保我们推出的产品很容易被宠物食品领域的大型工业企业所支持。因此，我们拥有品牌，我们的同事可以与我们一起玩，看到我们正在做的最好的方式，这似乎是我们的道路。这是一个 - 我们正在处理我们如何与加拿大卫生部和FDA的兽医和宠物运营商互动。我们正试图遵循这些规则和平台，感觉我们已经顺利完成了这条道路。但我不想告诉你它是Q4的日历，它更可能是宠物的日历Q1和Q4财政。
And I just wanted to follow up a little bit further on just your thoughts on the initial sort of rules around derivative products. And then whether you feel you have a competitive advantage relative to the other LPs in Canada?
The rules, they work. There is going to be some unusual aspects like people are accustomed to an ABV equivalent so that when you have a volume of something associated with the strength, I think there is going to be a better room for improvement there. Because of when they're coming out, I think, you're going to see cans of products rolling off sooner than glass bottle products or clear bottle products just because of timing on those consumables. So I think the launch will come up. Part of the way that we end up with an advantage is we've been using of our balance sheet and our visibility and views. And so we began building our bottling plant, for example, before there was a certainty that you're going to have a drinkable product, which is why it's going to be ready-to-make beverages on the launch. If you have, what we think a really well thought of beverages with great brands. And if they are on the shelf and available and people try them first and like them the best. This can become kind of a lifetime category and so we feel very good about it. I did mention earlier in the call, we have zones for vape filling and choco making that are already licensed for cannabis, they exist and have been constructive. And they're built through a food-grade standard that meets Health Canada criteria for controls. So I think being ready, having products early and having research is going to give us a serious shot at being globally relevant and what others do, I guess, that's what they'll do.
Next question comes from Bill Papanastasiou with Cannacord.
I just had a question regards to the top line. It looks like core cannabis revenues were down quarter-over-quarter, however your direct-to-consumer sales were slightly up. I was wondering how should we look at this line, given the Ontario market coming online? And maybe you can share some color on the magnitude of it in Q1 2020?
我刚才有一个关于顶线的问题。 看起来核心大麻的收入比上一季度有所下降，但是你的直接面向消费者的销售额略有上升。 考虑到安大略省市场上线，我想知道如何看待这条线？ 也许你可以在2020年第一季度分享一些颜色？
Yes. I think these things aren't instant on/off. We expected the top line for cannabis has an opportunity to start climbing as the stores are there and they go, but it is not like a rocketship. The rocketship is as more and more stores open, more and more medical opportunities come as more and more proof arrives. And as we get into Q3 fiscal for us in Q4. So it's just -- this feels like it's now on to a bit like it's picking up momentum business and building up margin business, but it's not flip, switch and they both go to the top.
是。 我认为这些事情不会立即开启/关闭。 我们预计大麻的顶线有机会开始攀登，因为商店在那里而且他们去了，但它不像火箭船。 随着越来越多的商店开放，随着越来越多的证据到来，越来越多的医疗机会随之而来。 当我们在第四季度进入Q3财政阶段时。 所以它只是 - 这感觉就像它现在有点像它正在增加动力业务和建立保证金业务，但它不是翻转，切换，他们都去了顶部。
Next question comes from Aaron Grey with Alliance Global Partners.
下一个问题来自Aaron Gray和Alliance Global Partners。
So I just have one quick one on the medical market. So you mentioned before that the patient count was down to about 70,000 from 83,000 and talked about the transition in terms of brands, and I think you also mentioned some supply chain issues. So could you just kind of talk about your confidence in kind of bouncing back there? And then also what you're kind of seeing overall in the medical market and whether or not those kind of patients are being serviced just given the allocation of product that you're seeing within yourselves and other kind of peers with the medical -- with the [indiscernible] marketing online?
所以我在医疗市场上只有一个快速的。 所以你之前提到，患者人数从83,000降至约70,000，并谈到品牌方面的转变，我想你也提到了一些供应链问题。 所以你能谈谈你对那种反弹的信心吗？ 还有你在医疗市场看到的整体情况以及这些患者是否正在接受服务，只是考虑到你在自己和其他医疗同行中看到的产品分配 - [音频不清晰]在线营销？
Good question. I feel actually quite confident that we're going to see growth in medical. And I think it's going to be happen because we had it obviously when you move brands like Tweed and Leafs By Snoop out of your medical store and then to the rec store that will migrate 10,000-ish of our customers. But we've been putting a large push on what I would call is onboarding patients, acquisition through clinics. And in the background, we're running these clinical trials. And I think that if we start reading data that shows that works a lot of people are going to jump up. And we just take that at the high-level. And if you take our spectrum brands, so there has been a lot of push that the actual spectrum branded product is growing like it is moving up as a medically selective product. So this to me feels like do the research, do the blocking and tackling, the brand portfolio is now well established. It's going to grow is our expectation fully.
Good. I think we have time -- two minutes left. If there is any others, otherwise thank you everyone for your time. This is another quarter, another year and it's only a once-in-a-lifetime opportunity that we see. So we're certainly not tracking on the Amazon model, but you see the value of investing when people transform their behaviors and we're at the front of that. So thank you for it, and look forward to next quarter.
好问题。我觉得我们相信我们会看到医疗方面的增长。而且我认为这将会发生，因为当你将Tweed和Leafs By Snoop等品牌从你的医疗商店转移到将要迁移10,000个客户的rec商店时，我们就明白了。但我们一直在大力推动我所谓的入职患者，通过诊所进行收购。在后台，我们正在进行这些临床试验。而且我认为，如果我们开始阅读显示有效的数据，很多人都会跳起来。我们只是把它放在高层。如果你选择我们的频谱品牌，那么实际的频谱品牌产品正在增长，就像它作为医学选择性产品一样向上发展。所以这对我来说就像研究一样，阻挡和解决，品牌组合现在已经很成熟。它的增长是我们的期望。
好。我想我们有时间 - 还剩两分钟。如果有其他人，否则谢谢大家的时间。这是另一个季度，又一年，这是我们看到的唯一一次千载难逢的机会。所以我们当然不会跟踪亚马逊模式，但是当人们改变他们的行为并且我们处于领先地位时，你会看到投资的价值。谢谢你，期待下个季度。
This concludes Canopy Growth's Fourth Quarter and Fiscal Year 2019 and Financial Results Conference Call. A replay of this conference call will be available until September 21, 2019 and can be accessed following the instructions provided in the company's press release issued earlier today. Thank you for attending today's call, and enjoy the rest of your day. Goodbye.
Canopy Growth的第四季度和2019财年以及财务业绩电话会议结束。 本次电话会议的重播将持续到2019年9月21日，并可按照今天早些时候发布的公司新闻稿中的说明进行访问。 感谢您参加今天的电话会，并享受您的一天剩余时间。 再见。
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