Canopy Growth Corporation (CGC) 首席执行官 Mark Zekulin 在 2020年 第一季度业绩 - 收益电话会议记录

Canopy Growth Corp (NYSE:CGC) Q1 2020 Results Conference Call August 15, 2019 8:30 AM ET

Canopy Growth Corp(纽约证券交易所代码:[CGC])2020年第一季度业绩电话会议2019年8月15日美国东部时间上午8:30


Mark Zekulin - Chief Executive Officer
Mike Lee - Executive Vice President and Chief Financial Officer
Rade Kovacevic - President

  • Mark Zekulin - 首席执行官
  • Mike Lee - 执行副总裁兼首席财务官
  • 拉德科瓦切维奇 - 总统


Andrew Carter - Stifel
Tamy Chen - BMO Capital Markets
Vivien Azer - Cowen and Company
Chris Carey - Bank of America
Graeme Kreindler - Eight Capital
Matt Bottomley - Canaccord Genuity
John Zamparo - CIBC
Douglas Miehm - RBC Capital Markets
Michael Lavery - Piper Jaffray
Owen Bennett - Jefferies
Brett Hundley - Seaport Global

  • 安德鲁卡特 - Stifel
  • Tamy Chen - BMO资本市场
  • Vivien Azer - Cowen and Company
  • 克里斯凯瑞 - 美国银行
  • Graeme Kreindler - 八大资本
  • Matt Bottomley - Canaccord Genuity
  • John Zamparo - CIBC
  • Douglas Miehm - 加拿大皇家银行资本市场
  • Michael Lavery - Piper Jaffray
  • Owen Bennett - Jefferies
  • Brett Hundley - 海港全球


Good morning, and welcome to Canopy Growth First Quarter and Fiscal Year 2020 Financial Results Conference Canopy Growth issued after financial market closed on August 14, 2019, a news release announcing its financial results for the first quarter and fiscal 2020 ended June 30, 2019. This news release is available on Canopy Growth's website and has been filed on SEDAR.
On this call this morning, we have Mark Zekulin, Canopy Growth's Chief Executive Officer; and Mike Lee, Canopy Growth's Executive Vice President and Chief Financial Officer.
At this time, all participants are in a listen-only mode. 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 do 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. Zekulin 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 Mr. Zekulin. Sir, please go ahead.

早上好,欢迎参加Canopy Growth First Quarter和2020财年财务业绩会议冠层增长,在2019年8月14日金融市场关闭后发布,这是一份新闻稿,宣布其第一季度和截至2019年6月30日的2020财年的财务业绩。本新闻稿可在Canopy Growth的网站上获得,并已在SEDAR上提交。

今天早上,我们邀请了Canopy Growth的首席执行官Mark Zekulin;和Canopy Growth的执行副总裁兼首席财务官Mike Lee。


在本次电话会议中,Canopy Growth将参考补充的非GAAP指标,调整后的EBITDA。这些措施没有IFRS规定的任何标准化会议。调整后的EBITDA在昨天发布的新闻稿以及本期管理层将在SEDAR上提交的讨论和分析文件中定义。

请注意,除非另有说明,否则所有财务信息均以加元提供。在Zekulin先生和李先生的准备发言之后,公司将进行问答环节,期间将从分析师处获得问题。 [操作员说明]。


Mark Zekulin

Thank you Carol and good morning everyone. So as usual of our Canopy, I would like to begin the call with a brief summary of our objectives as a Company, and then speak to our execution as it relates to those objectives. I will also discuss how that execution in turn translates into our financial performance and hit on our broad expectations heading into the future.
I will warn now that you can expect a little bit more detail than we have historically given for better or worse. After I speak, our CFO, Mike Lee will provide a more detailed overview of the financial performance of our business. And finally as mentioned, we look forward to taking any questions you may have. On that note, I will add that Rade Kovacevic, Canopy’s President, is also here and will be available to participate in the Q&A session.
So, what has Canopy been doing? As a first objective, we are focused on laying the foundation for dominance in an emerging global opportunity. To us this means developing intellectual property, building brands, building international reach and ensuring scaled production capability for current and future products. It means having a formula and level of credibility to ensure smooth and efficient expansion into new product forms, markets and channels.
But also, as a second objective, we are fixated on the process of evolving from builders to operators over the remainder of this Fiscal year, meaning that as our expansion program comes to a close in Canada, and as new value-add products come to market in Canada, we demonstrate a sustainable, high margin, profitable Canadian business.
The ambition of our first goal impacts the speed at which we achieve our second goal. Canadian headquarters resources serve not just our Canadian operations but our global ambition. But both objectives are equally important, and both will be achieved.
With that said, I will use the remainder of my time to go over each of these in some detail. Firstly, Developing Intellectual Property. During Q1, Canopy filed 56 patent applications across its various R&D
areas, including several related to pre-roll joint production, cannabinoid isomerization whatever that means, vape oil and vape devices.Together with the patent assets acquired form the C3, This Works and KeyLeaf, Canopy’s patent portfolio has increased to 110 patents and 270 patent applications.
So why is this important to us? Consider growing. Growing in a greenhouse to sell dried flower is great. Dried flower sales will always be a core part of any market. But growing protected, specialized genetics bred for specialized purposes, driven through efficient patented extraction technology and put into IP-protected delivery formats like beverages or vape products is even better.
Or consider market development. Selling medical cannabis in Canada through what is essentially a special access regimes is great. The model works and a strong brand and team like Spectrum Therapeutics can differentiate itself and make money. But selling a registered, differentiated, clinically proven medicine, produced to GMP standards and covered by insurance programs changes the money making equation exponentially.


我现在要警告你,你可以期待比我们历史上给出的更好或更坏的细节。在我发言之后,我们的首席财务官Mike Lee将更详细地概述我们业务的财务业绩。最后如上所述,我们期待您提出任何问题。在这一点上,我将补充说,Canopy的总裁Rade Kovacevic也在这里,并将参加问答环节。







或者考虑市场发展。通过基本上特殊的准入制度在加拿大销售医用大麻是很好的。该模型有效,像Spectrum Therapeutics这样的强大品牌和团队可以实现差异化并赚钱。但是,按照GMP标准出售已经注册的,有区别的,经过临床验证的药物,并且由保险计划覆盖,可以指数地改变赚钱方程。

These things take time and money, and unique expertise that only a few companies like Canopy has. But each person on this call has seen the speed at which this market evolves. Canopy will bring this future forward, faster and better than anyone else through its investments in research, intellectual property, and clinical programs.
Second, Brands and New Product Formats. The program with the greatest potential to drive the overall size of the Canadian recreational cannabis market is our multi-year effort to develop unique, high margin cannabis consumer products. To date, we have not, for competitive reasons, revealed significant information about these products.
With this conference call, we will begin revealing some information about of course still only at a high level. On vapes, our market research identified many design and functional limitations of current devices from battery life to device safety all the way down to how a devices do not remain in place when you put it on a flat surface.
We believed that most of the products that would be brought to market would be licensed versions of products that the market was already familiar with, with limited differentiation. We have deliberately taken a different path. Over two years ago, we started developing our strategy for vapes and how we wanted to enter this competitive market.
As the world’s largest cannabis Company, we have the resources to develop better vape products that will offer the market something truly differentiated. We have the added benefit of being an end-to-end vertically integrated Company, and nobody will be able to replicate this integration like we have as we develop supporting, proprietary technology.
Our technology team has come up with new ways to address many of the device design and functionality limitations that our market research has identified. Not only do our devices address these limitations, they add functionality that elevates the user experience and brings the industry into a new world of technology innovation. In an effort to protect the many innovations in our devices, we have filed many tens of patent applications covering unique features, functionality and device design.
In December 2019, we will be launching over 15 new SKUs related to our new vape technologies. As we get closer to unveiling the new products, we will provide full details surrounding the different device options, cartridge formats, strains availability and flavour profiles.
On beverages, we have of course spoken more openly about our belief in Cannabis beverages becoming a new consumer product category. We believe that high quality cannabis beverages that offer sophisticated taste, better bioavailability and dose control, along with zero or low calories options and little or no drug interaction, will appeal to not only to current cannabis consumers, but also expand the cannabis consumer category to reach a larger portion of the population.
In Q3, we will be revealing more details about the multiple beverage products that we will be bringing to market later this year. Benefiting from significant collaboration with Constellation brands, we are excited by the market segmentation, brands, packaging, taste profiles, strengths and formats of the cannabis-beverage products that we will be bringing to market.

这些东西需要时间和金钱,以及只有像Canopy这样的公司才有的独特专业知识。但是这个电话会议的每个人都看到了这个市场发展的速度。 Canopy将通过其在研究,知识产权和临床计划方面的投资,使这一未来更快,更快,更好。









And of course, occupying a former Hershey Chocolate factory, you can expect a great line of being the bar chocolate products. Our existing brands will leverage these new formats as line extensions, building on the brand equity and customer affinity that we have already created. In addition, we have created format specific brands, with unique value propositions that have a clear focus on their respective formats and consumer preferences.
Moving on now. Thirdly, let me speak to our International Reach, starting with the closest opportunity, the United States. The focus that we have had for some time in Canada is now equaled by our focus on the CBD and future THC markets in the United States. We now have over 70 staff in place in the U.S., including most of our senior leadership, and our Canadian headquarters team has dedicated more and more time and resources towards this next opportunity.
On the THC side, we are very pleased that Canopy was able to close the unprecedented and historic arrangement with Acreage Holdings that will see Canopy acquire all of the shares of Acreage when the production and sale of cannabis becomes federally-permissible in the United States.
With the arrangement now closed, Acreage is moving forward with plans to leverage our Intellectual Property. As Acreage communicated on their conference call yesterday, they plan on opening Tweed and Tokyo Smoke branded dispensaries going forward. And to that end, we expect to open several Tweed dispensaries this Fiscal year.
Similarly, with respect to medical cannabis products, Acreage anticipates undertaking a national rollout of Spectrum therapeutics branded products in 2020. On the adult-use side, while continuing with their current brands, Acreage will add Tweed branded products as a mainstream product line, rolling out in calendar 2020. With the brands will also come the knowhow’s in Canopy, to produce these products at scale
And while Acreage does its things, Canopy is squarely focused on CBD. Since January of this year, our team has been very active developing a range of high- quality CBD products and brands and securing the production resources necessary to bring into market by the end of this fiscal year. Our accomplishments in these efforts are numerous.
We have developed a broad set of CBD products that includes skincare and cosmetics, topical creams, vape products, beverages, edibles, oils and softgel caps. Our team is developing, in the context of the current regulatory environment, our targeted product marketing, advertising and branding programs for these products and we are on-track to reveal our CBD products this fiscal year.
Investors will recall that in the Q1 we announced the acquisition of skincare and sleep solution company, This Works. Today, we are leveraging our investment in This Works to ready one of our new CBD product lines, a range of CBD infused skincare and sleep solutions. Our team has been working since this past January to identify and contract a robust, scalable and outsourced supply chain to get CBD products into the market by the end of this fiscal year.



在THC方面,我们非常高兴Canopy能够与Acreage Holdings达成前所未有的历史性安排,当美国大麻的生产和销售在联邦政府允许的情况下,Canopy将获得Acreage的所有股份。

随着安排现已结束,Acreage正在推进利用我们的知识产权的计划。由于Acreage昨天在电话会议上进行了沟通,他们计划在未来开设Tweed和Tokyo Smoke品牌药房。为此,我们希望在本财政年度开设几家特威德药房。




投资者会记得在第一季度我们宣布收购护肤和睡眠解决方案公司This Works。今天,我们正在利用我们对This Works的投资来准备我们的新CBD产品系列,一系列CBD注入的护肤和睡眠解决方案。自今年1月以来,我们的团队一直致力于确定并签订一个强大,可扩展的外包供应链,以便在本财年结束时将CBD产品推向市场。

Working with American farmers, we have thousands of acres of hemp planted in the United States. In addition, our team has already procured hemp biomass and processing capabilities for the production of CBD for our product launch.
Our supply chain will be augmented, starting next fiscal year, by corporate assets including extraction and production resources at our facility in Kirkwood, New York as well as additional manufacturing facilities, for producing vape and beverage products, in select locations in the United States. We have already begun work on these facilities, though all locations have not yet been announced.
To stand up a new CBD business in the United States, we have made significant pre-revenue investments in building a strong team. Our team includes cultivation management, logistics, manufacturing, processing, sales, marketing and of course back office support in finance, IT and Human Resources. Over the past two quarters we have established offices in California and Colorado and will soon be establishing offices in Illinois and New York.
We are currently involved in high level discussions with key retailers in the United States including being constructively involved with them as we collectively navigate the regulatory process. These investments in the U.S., CBD market are significant, pre-date any associated revenue, and increase our costs both in the U.S., and other head office they negatively impact our short-term performance, but are on appropriate investment in the future.
Next, I would like to briefly speak about select accomplishments in our international business. First, in Europe, you will recall that we purchased C3 late in the first quarter of this fiscal year. Our Spectrum Therapeutics team is working towards full marketing and sales integration with C3 by the end of the calendar year.
Our C3 sales team of 30 experienced medical sales professionals will by the end of this fiscal year be fully integrated into the existing Spectrum Therapeutics business, representing the largest cannabinoid medicines company in Germany with the highest healthcare provider reach of any organization in the medical cannabinoid industry.
Our team has made significant infrastructure improvements that by the end of this month will allow for increased flow of product into European markets including into Germany, Poland, the Czech Republic and the United Kingdom. This includes significant increases in pre-pack and fulfillment capacity to ensure rapid product flow into the pharmacy channel.
On the supply side for Europe, our state-of-the-art 300,000 square foot greenhouse facility in Odense, Denmark is licensed and continues to be on-track to provide European supply this calendar year pending final regulatory approval of the harvested products.
This facility, certified in both Good Agricultural and Collection Practices as well as GMP designations, is currently completing pilot harvests. Commercial scale cultivation has begun, with initial harvests beginning early this fall.





接下来,我想简要谈谈我们国际业务中的选择成就。首先,在欧洲,您会记得我们在本财年第一季度末购买了C3。我们的Spectrum Therapeutics团队正在努力在日历年年底前与C3进行全面营销和销售整合。

我们的C3销售团队由30位经验丰富的医疗销售专业人员组成,将在本财年结束时与现有的Spectrum Therapeutics业务完全整合,代表德国最大的大麻素药物公司,拥有医疗大麻素行业中任何组织的最高医疗保健提供者覆盖范围。 。




Our teams operating in Latin America, Asia-Pacific, Europe and Africa have all shifted from market building to an emphasis on commercial sales. To that end we have exported almost 1000 kilograms or kilogram equivalents of dried flower, oil and softgel products from Canada since April 1st.
To reiterate, the ramp up of sales teams and operations across all of these continents remain just at the inflection point between pre-revenue ramp-up and commercial sales, with these investments and costs reflected in our financial numbers.
Fourth and Lastly, I will speak to scaled production capacity, which naturally leads into an overview of our performance in the first quarter of this fiscal year. At the outset, there are a number of things we are proud of that are worth noting.
Including the growth of our flower, oil and softgel sales in the medical market, strong growth in dry flower sales in the Canadian recreational market, the sale of over 1.3 million pre-rolled joints, proving the value of the automated machines that we designed in house, and a significant increase in the quantity of cannabis harvested during the quarter, with over 70% of that in high THC strains.
At the same time, as I mentioned at the start of the call, we recognize that this year is an inflection point between completion of our ambitious national ramp-up and all the investments that come with that, and the need to move into optimized, efficient, high margin business performance.
To that end, we have been focused on improving the supply of high THC flower products; Utilization of assets and operational efficiencies as we ramp up; Our manufacturing throughput and Ensuring the continuity of supply of CBD only products.
Well I will discuss our progress on these items momentarily, it also worth pausing to mention some of the macro variables at play in Canada which we are watching closely as I’m sure you are. These big picture events are increasingly relevant to our performance today and through the remainder of the fiscal year. Canopy built an ambitious sales and operations structure in order to succeed in a thriving Canadian market, and we have to ensure that overall market growth in Canada continues and accelerates.
The Company looks forward in particular to the successful launch of new cannabis formats and an acceleration in store openings across the country. Today, both Ontario and Quebec, Canada’s two most populous provinces have one store for every 595,000 and 495,000 people respectively, versus a saturation rate in California, for example of one store per 10,000 people.
As such, we applaud announcements by both provinces to license further retail locations and are signaling today that we believe the sector is ready for more stores to come. Canopy will continue to examine alignment of its strategy to market dynamics as the Canadian retail landscape unfolds, but remains confident in its Canadian plans today, the long-term potential of the Canadian market, and Canopy’s positioning to succeed as the market develops.







好吧,我将暂时讨论我们在这些项目上取得的进展,还值得暂时提及加拿大的一些宏观变量,我们正在密切关注,因为我确信你是。这些重大事件与我们今天和本财年剩余时间的表现越来越相关。 Canopy建立了雄心勃勃的销售和运营结构,以便在蓬勃发展的加拿大市场取得成功,我们必须确保加拿大的整体市场增长继续并加速。



Having said that, let me get back to our progress operationally. To increase sales of high velocity flower products we have now hit an annual run rate of over 160,000 kilograms per year, while continuing to bring additional growing capacity online. We have also brought an additional two automated packaging lines online to increase throughput with a third coming online later this month.
To increase supply and in turn sales of pre-rolled joints, we are now operating five days per week, 24 hours per day. We have three automated lines in place and operating and have moved production from a temporary setting to the recently licensed 175,000 square foot Advanced Manufacturing Building, bringing operational efficiencies.
To ensure that we have more than adequate supply of extraction inputs for the next generation of value-add, high margin cannabis products, we have obtained our processing license for our large scale continuous extraction system in Aldergrove, estimated to be online in Q3 with extraction throughput more than capable of supporting our BC operations.
We have also retrofitted the KeyLeaf Life Sciences facility in Saskatchewan, a company with over 50 years of business experience in the extraction industry. This facility is expected to be online by early Q3 and is conveniently located near our hemp farming and outdoor cannabis operations in the province with capacity to extract approximately 5000 kilograms of hemp or cannabis per day.
To ensure we have consistent supply of CBD products across both medical and recreational markets, we will be able to leverage the 900 metric tonnes of hemp biomass we harvested from 4,000 acres last fall and extract it at the KeyLeaf Life Sciences facility this fall, with an expected yield of thousands of kilograms of pure CBD.
We will also further increase hemp extraction with our planned harvest of an additional 5,000 acres of hemp this fall. We also continue to invest in the development of new intellectual property related to cannabis production, processing technologies and plant genetics.
We are now squarely focused on driving demand for our brands, and our current and future value-add products in the Canadian recreational market. This includes extensive training programs with retailers across Canada and ensuring we bring high-demand CBD SKUs to market.
It also includes communicating to provinces that our supply can now exceed current demand through the existing limited retail platform, providing confidence to expand the number of retail locations being licensed in order to create further market demand.
Next, I would like to discuss the readiness of our facilities and people to produce the next generation of new, value-add consumer cannabis products. During our last conference call, we identified a number of milestones that we were expecting to achieve on the path to commissioning our new bottling plant. And we have achieved those milestones.
The license application for the beverage manufacturing facility was submitted, on time, on June 28th. Processing skids, large 20,000 gallon tanks, and piping equipment began arriving in July, as planned. Bottling line systems destined for our facility have begun completing Factory Acceptance Testing in July with full installation and turn over to operations expected by late October.







我们现在正专注于推动我们品牌的需求,以及我们目前和未来在加拿大娱乐市场的增值产品。这包括与加拿大各地零售商的广泛培训计划,确保我们将高需求的CBD SKU推向市场。




Automated systems related to the filling and packaging of our vape products are undergoing testing during August and September, with delivery to site and installation beginning later this month and are on-track to be turned over to operations by October. The necessary vape filling and packaging rooms have also already been licensed by Health Canada.
And lastly, a reminder that automated systems related to chocolate manufacturing are already on site and qualified, with the associated rooms already having been licensed by Health Canada. With critical equipment on site, equipment qualification well underway and a capable and experienced operations team in place, we remain confident that we will begin producing high quality beverages, vape and edible products in the third quarter of fiscal 2020.
So, in summary, as I hope its clear from this call, our strategy has not changed. We will continue building
capacity in Canada, the United States, Europe and beyond. Our commitment to build-out our CBD platform in the United States, to acquire Acreage when a triggering event occurs has not waivered. Our commitment to research, and the incredible potential of the medical market has not changed.
Building organizational scale, investing in product research and development, and bringing value-add consumer products and medical therapies to market remain high priorities, even though these investments have a meaningful impact on our short-term performance. This is how we will create the most shareholder value over the medium and long-term, in an increasingly complex and competitive global sector.
However, we are well aware that our business will, in the future, be increasingly judged by financial metrics including achieving positive earnings in our consolidated corporate P&L. Based on our current view of the growth of our markets including distribution, retail and the coming expansion of our product offerings, we expect that Canopy’s net revenue will achieve a $1 billion run rate by the end of the
fourth quarter of fiscal 2020.
Further, Canopy is committed to its Canadian business delivering positive adjusted EBITDA on a quarterly basis within fiscal 2021. Still further, Canopy’s consolidated operations are forecast to deliver positive adjusted EBITDA on a quarterly basis within fiscal 2022.
Finally, we are aligned with Constellation Brands in the expectation that our consolidated operations will begin to deliver positive net income in the medium-term, that is within three to five years. And last of all, before Mike continues with a more detailed discussion of our Q1 performance, I would like to provide an update on the Company’s current leadership transition.
As you all know, on July 3rd, we announced a leadership change that saw Bruce Linton leave the Company, myself move from my role as President and CO-CEO to sole CEO, and Rade Kovacevic become President. Additionally, we announced that I have made the decision to leave Canopy once a suitable CEO is found. One that can embody all of the vision and ambition that Canopy has, while bringing fresh energy and experience to drive this incredible Company to the next level.









最后,我们与Constellation Brands保持一致,期望我们的综合业务将在中期(即三至五年内)开始实现正净收益。最后,在Mike继续对我们的第一季度业绩进行更详细的讨论之前,我想提供有关公司当前领导层转型的最新信息。


I can confirm what the Company has retained recruiter Heidrick & Struggles, and that this search is now well under way with several exceptional candidates already identified. We expect to complete the transition process within the next several months.
This concludes my long remarks ad I will pass the call over to Mike to review our first quarter fiscal 2020 financial results. Mike, please go ahead.

我可以确认公司保留了招聘人员Heidrick&Struggles的内容,而且现在已经确定了几个特殊候选人。 我们希望在未来几个月内完成过渡过程。

我的长篇评论到此结束,我将把这个电话转交给迈克审查我们的第一季度2020财年财务业绩。 迈克,请继续吧。

Mike Lee

Great, thanks Mark. Good morning, everyone. I will begin my remarks with a brief review of our top-line performance.
During the first quarter of fiscal 2020, we generated net revenue of 90.5 million on net cannabis revenue of 71.7 million. This includes sales of 10,549 kilogram per kilogram equivalents, which is up 13% versus Q4 of fiscal 2019 or up 291% versus Q1 of fiscal 2019.
Looking at revenue by channel, gross revenue in the Canadian rec market totaled 61 million, including 50.4 million in product wholesale to the provinces, and 10.6 million of revenue from our retail stores. Our gross revenue for the rec channel includes an $8 million provision for returns that I will speak about in more detailed in a few minutes.
Gross revenue from our global medical channel reached 23.6 million, including 13.1 million of gross revenue from our Canadian medical channel, and 10.5 million from our international medical channel. As you will likely recall, we recently acquired a C3, which accounted for 8.8 million of our international medical channel sales.
Looking at our medical channel trends, the Canadian medical business rebounded in Q1 with growth of 13%, driven by increased supply that Mark highlighted earlier, with continued improvements to our export process and higher inventory levels available for export.
We expect International Medical to grow in coming quarters. We also had other revenues of 18.8 million, which includes revenue from stores and Deco, This Works, as well as revenue from our clinics and merchandise sales.
And now a quick look at volume sales, I would like to highlight the following. During the quarter, we sold 9,060 kilogram and kilogram equivalents into direct channel, which is up 14% versus Q4. Of this 7,673 kilograms for dry cannabis, which is an increase of 94% versus Q4 of F19.
And we also sold 1.3 million pre-rolled joints which represented 16% or 9.7 million of total rec cannabis revenue. In the global medical channel, we sold 1,489 kilogram and kilogram equivalents of which 46% were softgels and oils. And this is up from 70% in the first quarter of fiscal 2019.
Now back to the revenue provision that I discussed earlier. Being a short nine-months into this new adult-use market. We, along with our provincial and territorial agency partners have been working to improve the overall supply chain for the rec market.
We are working hard to streamline business processes with a focus on improving fill rates and reducing out of stocks, while also improving inventory turnover, especially as a sector grows. And working with the agency partners, we build forecasts into our production plans which consider a number of factors, including the phase of new store openings.
And being an operator of physical retail stores ourselves, we understand that the pace of store openings is affected by a variety of factors, most notably the time required to complete the retail permitting process and licensing requirements.
In our detailed review of wholesale inventories at the end of Q1, we concluded that there was a modest surplus of oils and softgels in certain locations and as such, we concluded that an $8 million provision for returns was necessary. This charge has been reflected in recorded gross revenue for oils and softgel cash in the rec market.






我们预计国际医疗将在未来几个季度实现增长。我们还有1880万的其他收入,其中包括商店和Deco,This Works的收入,以及我们诊所和商品销售的收入。







Taking all of this into account, net revenues for the first quarter of fiscal 2020 are largely in-line with Q4 fiscal 2019 and with our latest harvest of over 40,900 kilograms, we expect to return to growth in the next quarter.
Now I would like to turn 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 our Aldergrove, Nerada and Niagara greenhouses, as well as costs associated with developing vape, edible and beverage products for which markets will be available later this calendar year.
Gross margin in the first quarter of fiscal 2020, before the IFRS fair value impacts was $13.2 million, or 15% of net revenue. Comparatively gross margin in the first quarter of fiscal 2019 was $11.1 million, or 43% of net revenue.
The lower gross margin percentage in the first quarter of fiscal 2020 was primarily attributed to $16.2 million of operating expenses for facilities not yet cultivating or processing cannabis, producing cannabis related products or facilities that has underutilized capacity.
In my remarks during our prior call, I highlighted the startup costs related to our advanced manufacturing building and new bottling plant would continues to serve as a modest headwind in coming months. In the first quarter, we incurred expenses of approximately $1 million related to the commissioning of our advanced manufacturing building.
Excluding these costs associated with underutilized assets and non-recurring expenses, the gross margin before the fair value impacts and cost of sales and other inventory charges was $29.4 million or 32% of net revenue. With utilization increasing in these facilities, we expect our operating costs to normalize in the next several months as we work through seed to sale, and we expect gross margins to surpass 40% by the end of the fiscal year.
Let me briefly speak about operating expenses. Sales and marketing expenses were 45.1 million in the quarter, reflecting increased staffing as we build out our network of Tweed and Tokyo Smoke-branded retail stores in Canada.
Increased staffing in our sales and marketing functions to support both our domestic and international markets and investments into driving brand awareness and educating consumers through various marketing, trade marketing and promotional campaigns. But we are also making investments ahead of revenue to prepare for the second phase of recreational cannabis, as well as CBD products in the United States both of which are expected to launch later this year.
Research and development expenses grew to 8.5 million in the quarter, reflecting our investments in vape, plant genetics, applied technology, as well as the cannabis based medical therapy clinical research, and we expect our R&D investments to expand further with our recent acquisition of Beckley Research and the associated clinical trials that are underway.
G&A expenses grew to 62.3 million, as we have built out our global team. Back office functions, information technology, human resources and legal. Investments in acquisition related activities totaled 13.2 million in the quarter and included investments related to implementing the plan of arrangement with Acreage Holdings and closing acquisitions of C3 and This Works. Share based compensation was 87.3 million, it was down 5.8 million from Q4, due to reduced expenses on acquisition milestones.



在IFRS公允价值影响之前,2020财年第一季度的毛利率为1320万美元,占净收入的15%。 2019财年第一季度的毛利率相对较高,为1110万美元,占净收入的43%。




让我简单谈谈运营费用。本季度销售和营销费用为4510万美元,这反映了我们在加拿大建立Tweed和Tokyo Smoke品牌零售店网络的人员增加。



由于我们建立了全球团队,G&A费用增长至6230万。后台功能,信息技术,人力资源和法律。本季度对收购相关活动的投资总计为1,320万,其中包括与实施Acreage Holdings的安排计划以及收购C3和This Works的相关投资。由于收购里程碑的费用减少,基于股票的薪酬为8730万,较第四季度减少了580万。

Moving beyond operating expenses, I would like to spend a few minutes on other income and expense. We noted in the subsequent event know in our fourth quarter and fiscal year 2019 press release associated with the approval of certain modifications to the investor rights agreement with Constellation Brands, as well as terms of existing warrants that Canopy growth would record a material non-cash charge during the first quarter of fiscal 2020.
As I highlighted during our previous conference call, and as previously addressed in the management information circular related to the Acreage deal. We and Constellation Brands agreed to a modification to the investor rights agreement with Constellation Brands. And 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.
The fair value adjustments, the accounting of which is detailed in Note 25 of the consolidated financial statements and recorded through the consolidated statement of operations resulted in a non-cash charge of $1.2 billion. Going forward, the revised Tranche A and B warrants will be accounted for as equity instruments and will not result in subsequent re-measurement in the P&L.
In addition, the Tranche C warrants will be classified as a derivative liability for which the fair value will be nil given that they are based on the five day volume weighted average price or the VIVA. The remaining expense in gain items included in that total other expenses the majority of which are non-cash are further highlighted in our in MD&A for the three-months ended to 30, 2019.
The Acreage arrangement provides Canopy with the option to acquire 100% of the shares of Acreage with a requirement to do so once U.S. cannabis production and sale is federally permissible in the United States. And exchange for this option, Canopy has made an upfront payment to Acreage shareholders that totaled $300 million, which will be recognized as a financial asset on Canopy’s balance sheet.
Subsequent changes in the fair value of this option will be recognized through our consolidated statement of operations and will be disclosed in our quarterly report. The fair value accounting of the Acreage option, which will add a non-cash expense or gain into other expenses will introduce some volatility into our statement of operations.
Now, let's briefly review adjusted EBITDA, our supplemental non-IFRS measure for the first quarter of 2020. Adjusted EBITDA is defined as earnings from operations as reported before interest, taxes, depreciation and amortization, and is further adjusted for non-cash items such as stock based compensation expense as well as an accounting for biological assets and inventory in acquisition costs.
And we believe adjusted EBITDA is a useful financial metrics to help investors understand the operating performance of our business before the impact of investments and acquisitions and income taxes and non-cash fair value measures.

超出运营费用,我想花几分钟时间来支付其他收入和费用。我们在随后的事件中注意到,我们在第四季度和2019财年的新闻稿中了解到与Constellation Brands的投资者权利协议的某些修改的批准,以及现有权证的条款,即Canopy增长将记录重大的非现金在2020财年第一季度收费。

正如我在之前的电话会议中所强调的那样,以及之前在与种植面积交易相关的管理信息通报中所述。我们和Constellation Brands同意修改Constellation Brands的投资者权利协议。新投资者权利协议有两项与其认股权证行使价相关的修改,以及认股权证的到期日,两者均受公允价值调整。




本期权的公允价值的后续变动将通过我们的合并营业报表确认,并将在我们的季度报告中披露。 Acreage期权的公允价值会计将非现金支出或收益加入其他支出中,这将在我们的经营报表中引入一些波动性。



Our adjusted EBITDA for the quarter amounted to a loss of $92 million as compared to a loss of $22.5 million in the comparative period last year. From the beginning, our Company has had different aspirations we have long believed the success in this industry should not be judged by selling dry cannabis flower to existing cannabis consumers in Canada.
Instead, we believe the true opportunity and ultimately the path to generate the greatest sustainable return on investment over the long-term will be driven by our Company becoming a global consumer in medical products Company with a product offering that expands the cannabis category beyond traditional consumers to also include consumers that have not yet tried cannabis for the first time. And to accomplish this, the scope of activities and investments will continue to be greater.
We have invested in the development of infrastructure to produce what we believe will be a new category defining cannabis beverage. As Mark highlighted earlier, we have invested in a range of new feature and function rich vape products, we are standing up a new CBD business to start in the U.S., we are investing in scientific research and clinical trials that we believe will pave the way for cannabis based medical therapies to enter the market. We are investing in development of medical markets around the world. And we of course have our core operations that generates revenue for us today in Canada and Europe.
So as we continue to mature as an organization, it is important that we distinguish the financial performance of our core operations from that properties other activities hence we have recently expanded or adjusted EBITDA reporting to include a breakout of the existing unchanged metrics into the three subcategories as follows.
Number one, adjusted EBITDA related to corporate operations and corporate overhead and this will include our Canadian and European results. Adjusted EBITDA related to non-operating or underutilized facilities, which contains the costs that we often cite in our explanation and reconciliation of reported gross margins to normalize gross margin. And adjusted EBITDA related to strategic investments in business development, which includes global research and development and global spending beyond Canada and Europe.
The breakout of these measures are captured in our press release and our MD&A and for Q1 our adjusted EBITDA on core operations and corporate overhead was a loss of 57.8 million. Our adjusted EBITDA of non-operating and underutilized facilities was a loss of 16.2 million and our adjusted EBITDA on strategic investments and business development was a loss of 18 million. Totaling the 92 million cited previously.
Taking a look at our overall net loss on a reported basis, which includes all fair value adjustments for biological asset accounting, as well as the non-cash $1.2 billion fair value adjustment related to the extinguishment of warrants discussed above was 1.3 billion or $3.70 per share.








I would like to now turn to the balance sheet. At June 30, 2019, we had cash and cash equivalents available and marketing securities on hand totaling 3.1 billion, representing a decrease of 1.4 billion for March 31, 2019. The primary use of cash during quarter was for the C3 and This Works acquisitions totaling approximately 430 million.
The premium paid for the Acreage call option, which was 395 million in Canadian dollars and capital spending for infrastructure, which was 212 million. And the balance was related to ongoing debt servicing and funding for operational losses.
Finally, I would like to provide an update on the priorities that I covered during our last call. One of my key priorities for the Company is to strengthen our financial reporting and controls and this includes everything from mitigating our material weakness on end user computing that is covered in our MD&A to reengineering our financial close and reporting processes.
So that we can better support the business with reporting and analytics. While also speeding up our external reporting process in anticipation that we will someday be an accelerated SEC filer. I'm happy to report that all of these projects are underway, that we are fully resourced, and our project plans are in place and we expect to make tremendous progress in coming months.
I also mentioned my desire to revisit our ERP strategy and this work is also underway. I will provide a much more detailed update on Q2 earnings call. On our Q2 earnings call, I will also shared more about the outcome of our upcoming Foreign Private Issuer Tests, which will help to solidify our plans for conversion to U.S. GAAP at the end of FY20.
For now, this concludes my review of Canopy's financials for the first quarter of 2020. And we would like to feel questions from analysts on the call.








[Operator Instructions]. Our first question this morning comes from Andrew Carter from Stifel. Please go ahead.

[操作员说明]。 我们今天早上的第一个问题来自Stifel的Andrew Carter。 请继续。


Hey thanks good morning. So I guess, first thing I wanted to ask is the building brands has been a long-term focus for the Company that you have reiterated. And you have obviously outlined some pretty compelling products for the next generation. But wanted to ask about kind of where you stand today. And you have spent a lot of money on retail infrastructure obviously participated in campaigns where you can, but really, is there any differentiation for what your brand stands for and outside compelling product, there are still quite a bit of marketing restrictions. What is going to change in the second wave of the market?

嘿,早上好。 所以我想,首先我要问的是,建筑品牌一直是公司长期关注的重点。 您显然已经为下一代概述了一些非常引人注目的产品。 但是想问一下今天你站在哪里。 你花了很多钱在零售基础设施上明显地参与了你可以做的活动,但实际上,你的品牌代表什么和外界引人注目的产品有任何区别,还有相当多的营销限制。 第二波市场会发生什么变化?

Mark Zekulin

Yes excellent question. Thank you. So as I mentioned, we do have Rade Kovacevic here our President. So he is a guy who hasn't had a chance to talk. So we will let him fill this one.

是的好问题。 谢谢。 正如我所提到的,我们的总统拉德科瓦切维奇。 所以他是一个没有机会说话的人。 所以我们会让他填写这个。

Rade Kovacevic

Hi, thank you so much for the question. I think what I would say is you know we are really proud that many of the brands we brought to the recreational sector we started building five years ago. So we have lots of times to explain the propositions to consumers to build up brand opinion so far.
I think in addition to that, through the retail strategy we have had, we have had the opportunity in the early days of recreational legalization for consumers to interact directly with the brands and have sort of a hands-on feel for them.
We have been able to leverage that in terms of sort of the good, better and best pricing scheme to ensure that each of these brands has a clear place to live, they didn't mapped out well in terms of different consumer segmentation.
And I think as Mark spoke to, the goal would be to take the intellectual property, align it with the brand, and then leverage what we have built in the current market as we move to sort of Cannabis 2.0.

嗨,非常感谢你提出这个问题。 我想我会说的是,你知道我们为五年前开始建造的娱乐业带来的许多品牌感到非常自豪。 因此,到目前为止,我们已经有很多次向消费者解释建立品牌意见的主张。





Got it. And then just kind of a second kind of question about Cannabis 2.0. Have you been able really to share any of your innovation details with some of your retail partners or customers. And kind of help us to understand how receptive they are to kind of understanding this new category? And, in the speech, particularly to the beverages where you have made a lot of investment or made investment? Is the infrastructure out there going to be there to support that form and maybe push it above, what we see here in the U.S.?

得到它了。 然后只是关于Cannabis 2.0的第二种问题。 您是否真的能够与您的零售合作伙伴或客户分享您的任何创新细节。 还有什么能帮助我们理解他们对接受这种新类别的接受程度如何? 并且,在演讲中,特别是对您投入大量资金或进行投资的饮料? 那里的基础设施是否会支持这种形式并且可能将其推到上面,我们在美国看到的是什么?

Mark Zekulin

Yes, for sure. So I think a few points on that. I would say we started discussing our innovation segments with the Cannabis Boards about six months ago. So we had our innovation team go around do a road show and help the boards understand the formats that were coming sort of with a consumer first mindset on our side, in terms of why would the demand exist? How are these products disruptive and so forth.
Second to that, in the past I would say one to two months across probably the majority of Cannabis Board at this point we have submitted actual SKU listings with pricing and so forth and had those in person conversations with the Cannabis Boards.
I think, overall, across the market, there is excitement about the Cannabis 2.0 products, the ability to convert further cannabis consumers from the black market to the legal market, to grow the overall size of the cannabis market and increase sales.
On specifically new formats, I think one of the advantages to the Cannabis Board is being full of people used to be Alcohol Boards, is they are fairly comfortable with the beverage sector. So to your question, yes, we have worked through on the logistics, shelf spacing considerations and things of that nature with beverages.
I would say we had a strong trademark in educational plan in terms of helping consumers understand and I think the big difference you see with our beverages compared to the U.S., market is really looking at our beverages as all the IP work we have done and scientific development work to ensure that our beverages are analogous to alcohol, in terms of on-site time, duration and so forth.
I think it is a very different approach than has been taken in the U.S., recreational market where it has been very focused on sort of a high dose, high strength, single use as opposed to occasion based approach to beverages.
So from the outset, we think it will be stronger than the U.S., that said we have a moderated approach with moderated building of inventory going into that, we are able to react to levels of demand and so forth.









Thanks, I will pass it on.



Our next question comes from Tamy Chen from BMO Capital Markets. Please go ahead.

我们的下一个问题来自BMO Capital Markets的Tamy Chen。 请继续。

Tamy Chen

Yes, thanks. My first question is could you just comment on your revenue performance in the quarter in the rec channel, we have seen some of your peers increase share while yours has been largely flat. What would you attribute it to, is it not the right mix of products and your rec average selling price was also down even backing out the return provision? So just wondering what factors played a part in all of this?

对了谢谢。 我的第一个问题是,您是否可以评估您在rec渠道中本季度的收入表现,我们看到您的一些同行增加了份额,而您的同行基本持平。 您认为它是什么,是不是正确的产品组合和您的rec平均销售价格也下降甚至退回回报条款? 所以只是想知道在所有这些因素中起了什么作用?

Mark Zekulin

Yes. Thanks Tamy. So Mark here. The way I see it is Canopy had incredible success coming out of the gate in October. Not perfect of course, but between our ability to get our scale facilities running, our logistics, our distribution, our sales, we really got out to a great start that allowed us to achieve a very good market share.
And in this sector, there is not enough data to pinpoint exactly what the market share is, but you know I would confidently say it is between one-fourth to one-third of the markets at Canopy market share. So we are incredibly pleased with that.
What has happened now over the last eight-months or so, is a couple things. Firstly, obviously, our competitors have now began to ramp up with their own supply, which means they are able to increase revenue from a lower base, but to have that revenue increase and taking some market share back.
And the second thing, frankly, is that we have gone through a process of doing some retrofitted and some changes to our facilities that were brought online to make sure that they have the right yields, the right output over the long-term.
So I think, what we have seen is, in my view, we are still within that one-fourth to one-third market share, it is probably where as we are at the top of that band and we are out towards the lower end of that band. But I feel pretty good and I would say in terms of narrative, if you gave me the choice between having a 10 share moving to 15 to 20, or having a 35 moving to 30 or 25, I would still take the 25 ending point.
And as we look forward, obviously with the harvest that we just had with the value add products coming online with the scale and the systems, we certainly expect to maintain and increase our market share and as the market grows clearly that means to increase our revenues. Hopefully that hit on point one, I think Mike, do you want to speak to point two?







Mike Lee

Sure, yes. So Tamy on your question about ASP and pricing. What I will say is overall our pricing is up about 1% total Company global sales Q1 versus Q4. When you look at the Canadian medical channel, our average price is up around 8% versus Q4.
When you look at recreation average price versus Q4 is down about 13% entirely driven by mix between bud and our softgels and oils. So in Q4, we have about a 50/50 mix between bud and softgels and oils. Whereas in Q1, our mix was heavily weighted toward bud and less weighted on oil and softgels and oils and softgels being average higher price had a negative mix impact. So we would expect that to normalize going forward.

当然可以。 所以Tamy关于ASP和定价的问题。 我要说的是,总体而言,我们的定价比第四季度公司全球销售额增长约1%。 当你看到加拿大医疗频道时,我们的平均价格比第四季度上涨了约8%。

当你看到娱乐平均价格与第四季度相比下降约13%完全由芽和我们的软胶囊和油之间的混合驱动。 所以在第四季度,我们在芽和软胶囊和油之间有大约50/50的混合物。 在第一季度,我们的混合物大量加重芽,而油和软胶囊的重量较低,油和软胶囊的平均价格较高,产生负面混合影响。 所以我们希望能够在未来正常化。

Tamy Chen

Okay, thanks. And just my follow-up is on the return provisions you took in the quarter. I appreciate the color you gave earlier. Just wondering, did the inventory review was that spurred by provinces thinking about optimizing their inventory that they have bought and did any of the discussions if it involved provinces, did that also involve how the provinces are thinking about even flower SKUs that they have got at their warehouses?

好的谢谢。 我的后续行动就是你在本季度的回报条款。 我很欣赏你之前给出的颜色。 只是想知道,库存审查是否是由各省考虑优化他们已经购买的库存而进行的,如果涉及省份则进行任何讨论,这也涉及各省如何考虑他们所获得的花SKU 他们的仓库?

Rade Kovacevic

Hi, Tamy, Rade here. So what I would say is for us working with all the provinces business planning is an ongoing thing, you need to on a routine basis, either weekly or monthly, depending on the province. And so as the market evolves, as retail stores get launched, we are constantly reviewing various SKUs, inventory levels at provinces and rates of sale between those various SKUs.
So I think for us its more part of an ongoing conversation, as opposed to something new and looking at where the market is at, how many stores are planned in what period and us being proactive and cautious to ensure that we have the profession in place. I think it is more from a normalizing of rate of sale across SKUs as opposed to initial forecast, as opposed to a cause to concern going forward.

嗨,Tamy,Rade在这里。 所以我要说的是,我们与所有省份合作进行业务规划是一项持续的事情,您需要定期,每周或每月,具体取决于省份。 随着市场的发展,随着零售店的推出,我们不断审查各种SKU,各省的库存水平以及各种SKU之间的销售率。

因此,对于我们来说,我认为它更多地是持续对话的一部分,而不是新的东西,看着市场在哪里,在什么时期计划有多少商店,我们积极主动,谨慎地确保我们拥有专业。 我认为这更多来自SKU的销售率正常化而不是初始预测,而不是引起关注的原因。

Tamy Chen

Okay, thank you.



Our next question comes from the Vivien Azer from Cowen and Company. Please go ahead.

我们的下一个问题来自Cowen and Company的Vivien Azer。 请继续。

Vivien Azer

Hi, good morning. Just a housekeeping guidance and then my real question, Mike you enumerated the sequential change in pricing for both medical and adult use in Canada, that the real eye popper is the 6138 from international. Can you explain what that is, that looks like an anomaly.

早上好。 只是一个家政指导,然后我真正的问题,迈克,你列举了加拿大医疗和成人使用价格的连续变化,真正的眼睛是国际上的6138。 你能解释那是什么,看起来像一个异常现象。

Mike Lee

Yes, it is entirely driven by the C3 acquisitions during the quarter and as you know these are pharma grade products that have a much higher price point than our existing softgel, oil cannabis business.


Vivien Azer

So is that a good number to think about going forward?


Mike Lee

Yes, certainly and maybe Rade can jump in on expansion plans, but for C3 we can talk a little bit about what our expansion plans are going forward. I would also say that the mix is going to continue to evolve as the supply situation for our international markets improves. So it is going to be entirely driven by mix. So Rade why don’t you to cover the C3.

是的,当然也许Rade可以参与扩张计划,但对于C3,我们可以谈谈我们的扩张计划将来会发生什么。 我还要说,随着国际市场供应形势的改善,这种组合将继续发展。 所以它将完全由混合驱动。 所以Rade你为什么不报道C3。

Rade Kovacevic

Yes. So I think to that points, we are looking at how to leverage C3 across various international markets. And to Mike's point, it is a high quality pharmaceutical products and so the lead time to expansion is longer than medical cannabis flower and so forth.
So I think in the short-term, you will see that mix start to lean more towards cannabis flower as there are various regions come online sales, export, process with Health Canada has improved significantly in the past quarter.
And so you see growth there, we will average the price toward what flower sales are and then more in the medium to long-term working with the team at C3 through their integration in terms of leveraging those high quality pharmaceutical projects, globally to other regions.

是。 所以我想到了这一点,我们正在研究如何在各种国际市场中利用C3。 而迈克的观点是,它是一种高质量的药品,因此扩展的前置时间比医用大麻花等更长。



Vivien Azer

Terrific. And then my real question, Mike is on gross margin. So I think kind of first impressions last night been from a conversation that I was having. The sequential deterioration in your reported gross margin was quite disappointing. I think I'm actually even more surprised by your commentary on the call. Last quarter your adjusted gross margin excluding costs associated with underutilized assets and non-recurring expenses was 41%. In this quarter it is 32%. So how is it possible that you guys grew your kilograms harvested by over 300% and your underlying adjusted gross margin deteriorated that much sequentially? Thanks.

了不起。 然后是我真正的问题,迈克的毛利率很高。 因此,我认为昨晚的第一印象来自于我正在进行的对话。 您报告的毛利率连续恶化令人非常失望。 我想我对你的电话评论更加惊讶。 上个季度,您的调整后毛利率(不包括与未充分使用资产和非经常性费用相关的成本)为41%。 本季度为32%。 那么你们怎么可能让你们的公斤收获量增加300%以上,而你们的基本调整后的毛利率会连续几天恶化? 谢谢。

Mike Lee

Yes, sure. So the going back to the starting point of the normalized 32% that I talked about on the call, there is about six points of negative sales mix in the quarter due to more dry cannabis sales and less gel caps and oils during the quarter. That was a full six points of headwinds.
In addition to that, we had an increase in royalty payments related to houseplants that were as further headwind on margin. So when we normalize for that and get back to a normal softgels and oil mix. The normalized margin would be much closer to that 40% that we keep talking about in terms of Q4 target. But admittedly, we are also counting on productivity gains to get to that 40% margin as well.

是的,当然。 因此,回到我在电话会议上谈到的标准化32%的起点,由于本季度干燥的大麻销售量较少且凝胶帽和油脂较少,本季度约有6个点的负面销售组合。 这是一个完整的六点逆风。

除此之外,我们还增加了与室内植物相关的特许权使用费,这是对保证金的进一步逆风。 因此,当我们正常化并恢复正常的软胶囊和油混合物时。 标准化的保证金将更接近我们在第四季度目标方面所说的40%。 但诚然,我们也指望提高生产率,以达到40%的利润率。

Vivien Azer

Okay. Thank you very much.

好的。 非常感谢你。


Our next question comes from Chris Carey from Bank of America. Please go ahead.

我们的下一个问题来自美国银行的Chris Carey。 请继续。


Hi, good morning. So, I guess, just so I take a step back right just given kind of the quarter, which we expected to be underwhelming but the market's reaction. And I think there are a number of reasons to suggest here that Canopy set trials on sales and margins, right and that you should see pretty significant improvement ahead. But on the other hand, clearly the market needs some confidence on this front, especially around gross margins, right and so, I think it is important to kind of lay this out, right.
You alluded to something in the prior question around gaining share early in Canada. And that required you to kind of - you acquired the facilities in British Columbia, you really ramped production in facilities that weren't purpose built for cannabis. And it is usually you were like 2X kilos sold versus all competitors, right. But as you started to perhaps, see some issues in those facilities, you started to close them down and retrofit. And we saw harvest has decelerated, gross margins have come in and I guess, I'm just wondering, were the challenges you saw on those facilities significant and has the retrofits really been driving a lot of the harvest, which has decelerated and the margins which have decelerated.
And then are we now at the point where those retrofits are coming to an end and that the sales leverage that should really start to be taking off on the margin front, because I think if you just have a year of historical perspective on how the cultivation versus skill sold played out some of the gross margin, pressure and sales stagnation could make some sense. So just some perspective on that I think would be really helpful in the context and everything? Thanks.


您在前一个问题中提到了一些关于在加拿大早期获得股票的内容。这要求你有点 - 你获得了不列颠哥伦比亚省的设施,你真的在​​非大麻专用设施的生产中增加产量。对于所有竞争对手来说,通常情况下,你的售价是2X公斤。但是,当你开始或许开始看到这些设施中的一些问题时,你就开始关闭它们并进行改造。我们看到收获已经减速,毛利率已经进入,我想,我只是想知道,你在这些设施上看到的挑战是否显着,并且改造确实带来了大量的收获,这已经减速和利润率减速了。


Rade Kovacevic

Yes. So Rade here. So I think, a few things to take a step back and think about, when we brought those facilities online, we brought almost three million square feet of production capacity online all at once to ramp up product for the start of recreational and legalization, which is what allowed us to take a strong position from the outset. So we are very happy of that decision.
I think there basic things that we needed to improve that we knew were the case in the greenhouses, but we didn't want to miss that opportunity for initial inventory creation and sales in the first quarter of legalization to get that strong market share, get our brand solidified and customer of family built.
And so when we took them offline, we did planned upgrades that we knew were in place and what we have seen over quarter Q1 both in terms of the overall increase in harvest, our ability through our planning process out 70% of the strings would be high THC and a significant increase in the percent of the product that is high quality flower coming to markets, where demand currently is quite strong is that we were able to execute on that plan as we had hoped.
And so we are quite happy with the situation. We are leading to legalization. We have strong supply, strong market share, and that we have been able to bring these properly online now to the capacities we wanted, where we can now look at fine tuning and finding efficiencies both to reduce our cogs and increase overall yields.
And so I think, the margins are seeing play out is just the nature of scaling, these products have four to six months lead time, if you start at the time you have to grow the mother plants to get to market. And so there is a large amounts of labor as you bring these sites online. But I think the harvest in Q1 and you will see going forward speak to that being a strong success and position us very well to dominate the flower market.
And particularly given the flexibility to take these kilograms and determine flower versus new products based on rates of demand. So I think it sets us up for a very good position and as Mike alluded to before, puts us in a place where we have this margin build as we go into Q4.







Mark Zekulin

And if I could further add, just for perspective, having just finished Q1 harvest with a lion’s share of this work completed, we generated a harvest of 40,900 kilograms. In retrospect, in all of FY19, our harvest was 47,000 KG. So when one quarter, we produced a large, large percentage of what was produced all of last year. So that is just a critical, critical thing for investors to understand.

如果我能进一步补充,只是为了观点,刚完成第一季的收获,完成了这项工作的大部分,我们产生了40,900公斤的收获。 回想起来,在整个FY19,我们的收获是47,000 KG。 因此,在四分之一时间里,我们生产的产品占去年全部产量的很大一部分。 因此,这只是投资者理解的关键,关键的事情。

Mike Lee

And Chris, I will give it a threefold answer, I mean just on another example that that we spoke earlier, right, pre-rolled joint as an example. In Smiths Falls, in order to get pre-roll joints to market, we shutdown growing things, right, and we changed those rooms into a facility that could on a semi-manual, semi-automated basis create pre-roll joints.
And now with the infrastructure completed here in Smiths Falls that production gets moved to a new place a new license place, where it will be automated, where it will be in its proper home and the old parts certainly will go back to being grow operation.
So these are the natural things, so that we did in an early market to make sure that we got products online and served our customer needs, but that lead to inefficiencies and that will fully get fixed as restlessness all comes properly online.

克里斯,我会给它一个三重答案,我的意思是我们之前谈到的另一个例子,对,预卷联合作为例子。 在史密斯瀑布,为了将预卷接头推向市场,我们关闭了生长的东西,对,我们将这些房间改为可以半手动,半自动化基础上创建预卷接头的设施。

现在,在Smiths Falls完成基础设施建设后,生产将转移到一个新的地方,一个新的许可地点,它将自动化,在那里它将在适当的家中,旧的部分肯定会回到成长运作。



Yes, okay. That is kind of helpful perspective, right. And then, I guess, as my follow-up, right, the 41,000 kilos harvested this quarter, I think by my model you are probably would be now at a position where you have almost 90,000 kilos, just ready to go you $90 million of finished goods $250 million of work in progress.
And so I'm trying to understand why this sort of foundations shouldn't be sort of kind of a real acceleration in quarter-to-quarter sales from here. And then maybe just comment on the size of your inventory right now and why that shouldn't maybe give you the uplift in the fiscal Q2? Thank you.

是的,好的。 这是一种有用的观点,对吧。 然后,我想,作为我的后续行动,对于本季度收获的41,000公斤,我认为按照我的模型,你现在可能会有近9万公斤的位置,准备好你们9000万美元 成品2.5亿美元的在建工作。

所以我试图理解为什么这种基础不应该像这里那样实际加速季度销售。 然后可能只是评论你现在的库存大小以及为什么这不应该让你在第二财政年度提升? 谢谢。

Rade Kovacevic

Yes. So Rade here. So I think the important thing to look at the market, and Mark spoke to it earlier about retail stores per capita in Canada, compared to saturation points you see in Colorado, in the United States. And so the two big movers we see are retail - in Ontario and Quebec, both of which provinces with our that is applauding them have aggressive rollout plans for additional retail over the rest of our fiscal year.
And so what the problems they have been facing, they need the flowers to come online to be able to do this. And that is what our Q1 harvest of 40,000 kilos represents. The next part post harvest is how quickly we can get to markets. And so I think to your question, a good example is in the first 10-days of August, which I will note include a long weekend, our quality assurance team released for sale, 3.5 tons of flower products and over 2.1 million pre-roll joints.
So it gives you an idea of us being able to now take those harvests in Q1, get them through our manufacturing finished good and quality assurance process and have them approved for sale and ready to go again to you as a snapshot of the proximity through the system.
I think what we now or being able to go to provinces and tell them down to the finished goods SKU level to give them confidence is we have the flower to be able to meet existing demand based on number of retail stores and for them to be able to confidently rollout more retail stores as they go forward. So I think the leg in the system is that rollout and understandably the provinces have been waiting to hear that the flowers online for them to be able to do that.
So what you will see is us building inventory that gives provinces now comforts that they can rollout more and more stores and others are great example of a province that is already begun that process. And then that will allow them to drive further demand through further points of distribution, which in turn allows us to further drive sales.
I think the other great part for us is it allows us to have finished with inventory that as we move into scaling new process or Candidates 2.0 that those products are in finished good forum and available while we focus on building a new inventory to be able to sell in December of those new Cannabis 2.0 products.

是。拉德在这里。因此,我认为重要的是要关注市场,马克早些时候谈过加拿大的人均零售店,而你在美国的科罗拉多州的饱和点数。因此,我们看到的两大推动者是零售业 - 在安大略省和魁北克省,这两个省份都鼓励他们在我们财政年度的剩余时间内进行额外零售的积极推广计划。





我认为对我们来说另一个重要的部分是它允许我们完成库存,当我们进入扩展新流程或候选人2.0时,这些产品已经完成了良好的论坛并且可用,同时我们专注于构建新的库存以便能够12月份出售那些新的Cannabis 2.0产品。


Okay. Thanks.

好的。 谢谢。


Our next question comes from Graeme Kreindler from Eight Capital. Please go ahead.

我们的下一个问题来自Eight Capital的Graeme Kreindler。 请继续。

Graeme Kreindler

Hi, good morning and thanks for taking my question here. Just a follow-up on the discussion there on the harvest figure in the overall inventory. I was just wondering if you could give any color just to get a bit more specific on. I understood that the future landscape of retail is not going to look like what it is now. But by all accounts, I think what you harvested this quarter could really sufficiently supply Canada in its existing format right now.
So is there any view to hold back a large portion of that inventory and get it ready for the extractable products, as well is there any thought about potentially adjusting prices in order to climb back up in the market share position or it was pretty flat quarter-over-quarter on the ASP. So just wondering if you could provide some color on those thoughts there? Thank you.

嗨,早上好,谢谢你在这里提出我的问题。 只是对整个库存中的收获数据的讨论进行跟进。 我只是想知道你是否可以提供任何颜色只是为了更具体一点。 我明白零售业的未来前景不会像现在这样。 但从各方面来看,我认为你本季度收获的东西现在可以用现有的格式充分供应加拿大。

那么是否有任何观点可以阻止大部分库存并为可提取产品做好准备,以及是否有任何考虑可能调整价格以便重新回到市场份额位置或者它是相当平坦的季度 超过ASP的季度。 所以只是想知道你是否可以在那些想法上提供一些颜色? 谢谢。

Mark Zekulin

Yes. For sure. So I would say in terms of hold back, there isn't a desire to hold back product, it is more about allocating flower inputs to the right product based on rate of sale and so forth. And building appropriate levels of finished goods inventory to give our customers or provinces comfort that finished goods are ready and on-demand as they scale. We will not overcome into a certain channels that we think are fairly agile and able to respond to demands.
On the pricing question, we have seen great growth in our TWD, which is our value brands across markets. And I think quite happy with the strategy of we initially focused our flower inventories on our better and best brands, Tweed, [indiscernible] Tokyo Smoke and all those brands. And so we want to make sure that the continuity of those products on shelf to build customer affinity. We didn't focus on value flower from the outset.
Now, as you have heard us come online, we are in a place where we can continue to support SKUs being in stock on our better and best brands, which long-term is well out of differentiation and affinity. Well really start to drive the value side of the market as well. And so it wasn't an area we chose to focus on the starts, very confident that that was the right play well say so in a year from now as well.
But it is an opposite category where we haven't played in a big way into place where now with the scale we have and the cost of goods sold will be able to drive down where we can play quite aggressively and pick up additional market share from a Canopy growth perspective.





Graeme Kreindler

Okay. Thank you. And just to follow-up. With respect to the eight million charge against sales. Is that a one-time event or is that something we could expect to have coming in future quarters here? Thanks.

好的。 谢谢。 只是为了跟进。 关于八百万的销售费用。 这是一次性活动还是我们可以期待在未来几个季度到来的事情? 谢谢。

Mike Lee

Yes, Mike here. So it is normal for CPG companies that have an ongoing revenue provision for estimated ongoing returns, I would remind you that the supply agreements with the provinces allow for returns at any point in the future. But I would say that now that this is established, and we have processes in place, where the information from the wholesale level inventories is now becoming more available more frequently. I would say that this is something that I wouldn’t expect to move the P&L in the future.

是的,迈克在这里。 因此,[CPG](Ph)公司对估计的持续回报有持续的收入准备是正常的,我想提醒您,与各省的供应协议允许在未来的任何时候获得回报。 但我会说,既然已经建立,我们已经制定了流程,批发级库存的信息现在变得越来越频繁。 我想说这是我不希望将来改变盈亏的事情。

Graeme Kreindler

Okay. Thank you for that. I appreciate it.

好的。 谢谢你。 我很感激。


Our next question comes from Matt Bottomley from Canaccord Genuity. Please go ahead.

我们的下一个问题来自Canaccord Genuity的Matt Bottomley。 请继续。

Matt Bottomley

Yes, thanks for taking the question. I just wanted to go back to the sales mix, particular on the recreational side of things. Can you just give us a little more color as to why the oil and gel caps of this quarter went essentially to zero. I think you were in 30 million or 35 million last quarter. Was that a decision in terms of allocation or was there any issues with production in getting those types of products out the door. It didn't seem to be a problem on the medical side? So just more color would be helpful.

是的,谢谢你提出这个问题。 我只想回到销售组合,特别是休闲方面。 你能不能给我们一些颜色,说明为什么本季度的油和胶帽基本上都是零。 我认为你上个季度的人数在3000万或3500万。 这是一个分配方面的决定,还是在生产这些类型的产品时出现任何问题。 它在医疗方面似乎没有问题? 所以更多颜色会有所帮助。

Mark Zekulin

Yes, thanks Matt. No it is not related to our production flow here, simply related to the product mix that we see demand for and ensuring that we allocate products appropriately to that mix. So certainly, as you say, our oils and softgel products remain exceptionally popular and an increasing share of our Canadian medical base and an increasing share of our global exports to medical market. So I think it is just an indication of properly seating the market with what customers are buying at the tail.
And I think it is also important to reference that at the tail part because, we still see softgel increasing in demand at the tail at the retail store with customers purchasing, right. So it is just a matter of ensuring that education continues. People understand that product increasingly better and we continue that velocity.

是的,谢谢马特。 不,这与我们的生产流程无关,只与我们看到的产品组合相关,并确保我们将产品适当地分配给该组合。 当然,正如您所说,我们的油和软胶囊产品仍然非常受欢迎,并且我们在加拿大医疗基地的份额越来越大,而且我们在全球医疗市场的出口份额越来越大。 因此,我认为这只是表明市场正确适应客户的需求。

而且我认为在尾部引用它也很重要,因为我们仍然看到在客户购买的零售商店的尾部需求增加,正确。 所以这只是确保教育继续下去的问题。 人们了解产品越来越好,我们继续这种速度。

Matt Bottomley

Great. And my follow-up just again on the provision. Has there been any communications from any wholesalers themselves that returns are more likely than not or is this just your own analysis you guys have done in making that determination?

非常好。 我的后续行动再次提供了条款。 是否有来自任何批发商自己的任何回复更有可能返回,或者这只是您自己在做出决定时所做的分析?

Mark Zekulin

Yes, I think it is as Rade alluded to before, it is normal course of business. We are always having these conversations, it is sort of like when somebody asks us do you have any conversations going on with Health Canada? We always have conversations going on with the Health Canada through the regular process.
So it is the same thing, we are always talking, we are always looking at the mix of what they have, the mix of what we are preparing, the mix of what customers are buying and for us through those conversations, we decided it was a prudent time to take that provision as we look forward.

是的,我认为这是Rade之前提到过的,这是正常的商业过程。 我们总是在进行这些对话,有点像有人问我们你和加拿大卫生部有什么对话吗? 我们始终通过常规流程与加拿大卫生部进行对话。

所以我们一直在谈论,我们总是在谈论,我们总是在考虑他们所拥有的东西,我们正在准备的混合,客户购买的组合以及通过这些对话我们的混合,我们认为它是 在我们期待的时候,谨慎地采取这一规定。

Matt Bottomley

Thank you.



Our next question comes from John Zamparo from CIBC. Please go ahead.

我们的下一个问题来自CIBC的John Zamparo。 请继续。

John Zamparo

Good morning. I want to ask about the revenue as well. You mentioned the lack of retail distribution points versus Colorado which is fair, but we have seen much of the rest of the sector advance revenues in Q2 versus Q1 on a calendar basis. I'm just trying to reconcile that with your B2B and B2C which are down sequentially. So could you helped us understand that and maybe talk about the ordering process of the provinces, I understand there is some lumpiness there, but just some commentary on that would be helpful?

早上好。 我想问一下收入。 你提到零售分销点与科罗拉多州相比并不公平,但我们已经看到其他大部分行业在第二季度与第一季度相比提前收入。 我只是想与你的B2B和B2C协调一致,这是顺序下降的。 那么你能帮助我们理解这个并且可能会谈论各省的订购过程,我知道那里有一些笨拙,但只是对此有一些评论会有所帮助吗?

Mark Zekulin

Yes, absolutely, thanks, John. I think it is fair to say that - it sort of goes back to the answer I gave before, we have had a great start and our goal is to maintain that share as the market continues to grow. And as our competitors have brought on increased supply, I think there is some natural expectation that they will increase their share. But I think, it is starting frankly from a lower base.
So certainly, our intention is as we have talked about the product mix in the high THC products coming online and our ability to push even more going forward. We are very confident in our ability to grow shares going forward. But as you say, there is an element of the pie has to continue to get bigger and I think we are seeing the provinces start do that.

是的,绝对,谢谢,约翰。 我认为可以公平地说 - 它可以追溯到我之前给出的答案,我们有一个良好的开端,我们的目标是随着市场的持续增长保持这一份额。 由于我们的竞争对手带来了更多的供应,我认为他们会增加自己的份额,这是一种自然的期望。 但我认为,它是从较低的基础开始坦率地开始的。

当然,我们的目的是在谈论高THC产品上线的产品组合以及我们向前发展的能力。 我们对未来股票增长的能力非常有信心。 但正如你所说,馅饼的一个元素必须继续变大,我认为我们看到各省开始这样做了。

John Zamparo

Okay, thanks. And then a follow-up on a question from earlier. You mentioned, you were decommissioning some assets for retrofitting, but you still hit record production level in the quarter. I mean, should we interpret that as stockpiling for Q4 and do you have the ability to shift your product mix in the back half of or the remainder of this year? Thanks.

好的谢谢。 然后对早先的问题进行跟进。 您提到过,您正在退役一些资产进行改造,但您仍然在本季度达到创纪录的生产水平。 我的意思是,如果我们将其解释为第四季度的库存,您是否有能力在今年的后半段或其余时间转移产品组合? 谢谢。

Rade Kovacevic

Hi, Rade here. So I think he was slightly misunderstood. What we were referencing was that in sort of mid-Q3 and into Q4 of last year. We had retrofit our large greenhouses in British Columbia and some work in Mirabel as well. Those came back online sort of early mid-Q4 and then those are the harvest you are seeing resulting in Q1. So it is not anything has been taken offline now, that was that historical retrofits. And now the facilities are fully online and producing and glad to see I was out in Vancouver two days ago touring the facility and they are doing great.

嗨,拉德在这里。 所以我认为他有点被误解了。 我们所提到的是在去年第三季度到第四季度。 我们改造了不列颠哥伦比亚省的大型温室,以及Mirabel的一些工作。 那些回到网上排在第四季度中期,然后那些是你在第一季度看到的收获。 所以现在没有任何东西被脱机,那就是历史性的改造。 现在这些设施完全在线并且生产并且很高兴看到我两天前在温哥华参观了这个设施并且他们做得很好。

Mark Zekulin

Yes. John and I will say, it is a bit of a fluid process, right. And if you could imagine a large facility like that. You will grow across, you will take it down, you will clean, you will put up a new crop, right. And so it might be a case that we don't fill the area for an extra couple of weeks, because we are filling the blank updating the irrigation line or the lighting system or gait track or whatever it is. So it is not so much on and off sort of thing. It is continual improvement, but we think we are there now.

是。 约翰和我会说,这是一个流动的过程,对吧。 如果你能想象一个像这样的大型设施。 你会长大,你会把它取下来,你会清理,你会把新作物,对吧。 因此,我们可能会因为我们填补空白更新灌溉线或照明系统或步态轨道或其他任何东西,因此我们可能会填补该区域额外的几周。 所以它不是那么多的东西。 这是持续改进,但我们认为我们现在在那里。

John Zamparo

Okay. Thank you.

好的。 谢谢。


Our next question comes from Doug Miehm from RBC Capital Markets. Please go ahead.

我们的下一个问题来自RBC Capital Markets的Doug Miehm。 请继续。

Douglas Miehm

Yes. I just want to circle back to pricing issue with respect to product that was returned. Correct me if I'm wrong. But I think a majority was gel caps and in the event we move ahead over the next sort of while and you have a little bit more share gel caps. But it appears that these four products that were having difficulty being sold, but you can correct me if I'm wrong. Why would you expect margins to jump back so dramatically to previous levels, when those levels of gel caps and oils were probably too high to begin with?

是。 我只想回到关于退回产品的定价问题。 如我错了请纠正我。 但我认为大多数人都是凝胶帽,如果我们在接下来的一段时间内继续前进,你会有更多的份额凝胶帽。 但似乎这四种产品难以出售,但如果我错了,你可以纠正我。 为什么你会期望利润率如此大幅度地回升到以前的水平,那时凝胶帽和油的水平可能太高而不能开始?

Mark Zekulin

Yes. Thank you. I think, so just to clarify it is not that - there actually have been return, provision reflects our assessment of the overall inventory levels versus rate of sale and precautionary step to account for that now, because we think it will - it has a probability of coming in the future. So it is not that they have actually been return yet.
So I think speaking probably more importantly to your point about the rate of confidence. Even in, let's say, the most ambitious product mix forecast for the existing SKUs, Flower and pre-roll joints on the one hand and oils and softgels. Oils and softgels were always going to be a smaller part of that mix.
So I think what actually gives the greatest confidence is thinking ahead to when what we call Cannabis 2.0 comes online, you have a whole range of products from vape, the beverages and chocolates, those are the ones we have talked about, but of course there are others even right.
And I think with those products online, I think you are nearly certain to see what looks like flower sitting out let's say a 90% share today falling to something closer to 50%, which is consistent with what you see in other markets.
So that opens up a big range and even bigger range then we see today of value add higher margin products and that can of course includes softgels or oils or sprays, but it can also include all of those other products that will come online.

是。谢谢。我认为,所以只是为了澄清它不是 - 实际上有回报,条款反映了我们对整体库存水平与销售率的评估以及现在考虑的预防措施,因为我们认为它会 - 它有可能来自未来。所以并不是他们实际上已经回归了。


因此,我认为实际上最有信心的是,当我们所谓的Cannabis 2.0上线时,您可以获得各种各样的产品,包括vape,饮料和巧克力,这些都是我们谈过的产品,当然还有其他人甚至是对的。



Douglas Miehm

Okay, so we will see some benefits, but in the next quarter or two, but honestly you are going to feel the real impact of that in your fiscal Q4. My follow-up question has to do with your very well connected company in the Canadian and international markets. But where do you think the rollout of the new retail stores in Ontario is going to be over the next two years given how important it is to your point here? And I will leave it there. Thanks.

好的,所以我们会看到一些好处,但在接下来的一两个季度,但老实说,你会在第四季度感受到真正的影响。 我的后续问题与您在加拿大和国际市场上联系紧密的公司有关。 但是,你认为安大略省新零售店的推出将在未来两年内推出,这一点对你的观点有多重要? 我会留在那里。 谢谢。

Mark Zekulin

Yes, thank you. I mean, I think you hit it on the head, Ontario is a major market, it is an important market. That is obviously the markets where we are based. I think if we think back after the change of government, their position was that they wanted an open full market, right. I mean, that that anybody wants to apply to run a retail store could do so.
And as we have talked about this chicken and egg game of is there enough supplies to justify the stores and then how these things turn, but at the end of the day, every indication I have is government remain committed to an open private cannabis market. So, as you say two years out, we would expect a fully open, as you say saturated retail market in Ontario.

是的,谢谢。 我的意思是,我认为你的头脑,安大略省是一个主要市场,它是一个重要的市场。 这显然是我们所依赖的市场。 我认为,如果我们在政府更迭后回想起来,他们的立场就是他们想要一个开放的完整市场,对吧。 我的意思是,任何人都想申请经营零售店都可以这样做。

正如我们已经谈到这种鸡蛋和鸡蛋的游戏是否有足够的供应来证明商店的合理性,然后这些事情如何转变,但在一天结束时,我所拥有的每一个迹象都是政府仍然致力于开放的私人大麻市场。 所以,正如你所说的两年,我们预计会完全开放,正如你所说的安大略省饱和零售市场。


Our next question comes from Michael Lavery from Piper Jaffray. Please go ahead.

我们的下一个问题来自Piper Jaffray的Michael Lavery。 请继续。

Michael Lavery

Good morning. I just wanted to get the outlook a little bit better. And two pieces maybe specifically, when you look at 4Q and talk about a billion run rate obviously something around 250 million. How do you think in rough terms that breaks down and specifically just trying to understand how much contribution from something like U.S. CBD or second wave products. What are some of the components of how we should think about getting to that number? And then a little further out when you look at the EBITDA positive guidance for 2022, how should we think about how that compares to the cash flow, would that be net cash flow positive from operations as well?

早上好。 我只是想让前景更好一些。 特别是两件作品,当你看第四季并谈论十亿运行率时,显然约为2.5亿。 您如何从粗略的角度思考故障,特别是试图了解美国CBD或第二波产品的贡献。 我们应该如何考虑获得这个数字的一些组成部分是什么? 然后再看看2022年的EBITDA积极指引,我们应该如何考虑与现金流量相比如何,那么运营的净现金流量是否也是积极的?

Mark Zekulin

Yes, thank you. So, on the billion dollar run rate, it is a great question. Our goal remains to hit that billion dollar run rate in that quarter. We certainly believe it is obtainable. We do depend on the Canadian market still, right.
So as we talked about, we are in full crafts to get revenues online across the world and in particular in the U.S., and I highlighted all the things we are doing to make that happen and to hopefully have a major contribution towards that but still at the end of the day, I think it is probably fair to say the Lion share of that will rely on the Canadian market.
There are macro factors that we have talked about new product formats coming online that will contribute towards that, about new store openings and the rate that allows that pie to get bigger to achieve that. Certainly from an execution point of view, we are not concerning our ability to hit that, as long as the macro environment allows for it.

是的,谢谢。 因此,在十亿美元的运行率上,这是一个很好的问题。 我们的目标仍然是在该季度达到数十亿美元的运行率。 我们当然相信它是可以获得的。 我们依然依赖加拿大市场,对吧。

正如我们所讨论的那样,我们正在全力以赴地在全球范围内,特别是在美国获得收入,我强调了我们为实现这一目标所做的所有事情,并希望对此有重大贡献,但仍然在 当天结束时,我认为Lion的份额可能会依赖于加拿大市场。

我们已经谈到了有关新产品格式即将上线的宏观因素,这将有助于实现这一目标,关于新店开张以及允许馅饼变大以实现这一目标的速度。 当然,从执行的角度来看,只要宏环境允许,我们就不会关注我们的能力。

Michael Lavery

And so I guess just follow-up of a couple things, I mean any specific color at all on how much U.S. contribution, if any you are counting on even now you said sales by the end of the year is that just a trickle or is that a meaningful piece of it and what is the right way to think about that?

所以我想只是对一些事情进行跟进,我的意思是任何具体的颜色都取决于美国的贡献,如果你指望的话,即使现在你说到年底的销售量只是涓涓细流或者是 这是一个有意义的部分,思考这个问题的正确方法是什么?

Mark Zekulin

I think it is a little early for you to try to quantify that. Obviously, as we look into the U.S., we are thinking big right, but there is still a number of questions in terms of retailer lineup and those types of things. So I think it would be premature, obviously there is the FDA and the rules that they set out. So I think, we are confident we will be there. And obviously the team is working very hard to make those meaningful. But it would be premature for me to try to quantify that. Mike, did you want to hit on the 2022?

我认为你现在尝试量化它有点早。 显然,在我们调查美国时,我们正在思考大事,但在零售商阵容和那些类型的事情方面仍然存在许多问题。 所以我认为现在还为时过早,显然有FDA及其制定的规则。 所以我想,我们相信我们会在那里。 显然,团队正在努力使这些有意义。 但是,我试图量化这一点还为时过早。 迈克,你想打2022年吗?

Mike Lee

On cash flow yes. So Mike, I think your question really is about free cash flow. So cash flow from operations certainly we would expect to be in-line with overall EBITDA meaning aside from normal inventory fluctuations and all of that it should correlate pretty tightly. So then the question then becomes what is your capital investment at that point in the business. I would expect that by FY22, a Lion share of our infrastructure build.
And Canada is behind us a good chunk of the U.S., is behind us. And then depending on federal permits ability and all of that, I think depending on when that happens that could be a binary event that changes the entire equation. But assuming that doesn't happen, I would expect that we would start to approach at a minimum breakeven operating cash flow and then depending on CapEx could be slightly positive, slightly negative.

现金流量是的。 所以迈克,我认为你的问题实际上是关于自由现金流。 因此,从运营中获得的现金流肯定会与整体EBITDA保持一致,除了正常的库存波动之外,所有这些都应该非常紧密地联系起来。 那么问题就变成了你在业务中那个时候的资本投资。 我希望到22财年,Lion的基础设施建设份额。

加拿大在我们身后是美国的很大一部分,落后于我们。 然后根据联邦许可能力和所有这些,我认为取决于何时发生这可能是一个改变整个方程的二元事件。 但假设没有发生,我预计我们将开始接近最低盈亏平衡的经营现金流,然后取决于资本支出,可能略微为正,略有负面。

Michael Lavery

Okay. Thank you very much.

好的。 非常感谢你。


Our next question comes from Owen Bennett from Jefferies. Please go ahead.

我们的下一个问题来自Jefferies的Owen Bennett。 请继续。


Good morning guys, hope all are well. I just had a question around the quality of the sales outlook, I guess particularly around flower. So I mean, if you think cynical, you could say share support to-date has being driven by essentially stuff in the channel. And by that I mean initially I mean you guys can see where the lead is, because you are the ones at the supply. But now over to coming online, you are seeing share pressure. And so I just wanted to kind of gauge what is the risk around this new flowers that is coming online and you said, you will see support, we should be able to push out retail stores new supply. But I mean, how confident are you once you kind of fill the channel in terms of us speaking and kind of longer channels over the next few quarters. I mean is there rigs there similar to what you see with the softgels and the oils now, where you are going to have to put in provisions to returns on some of these flowers?

大家早上好,希望一切顺利。 我对销售前景的质量有一个疑问,我想特别是围绕着花。 所以我的意思是,如果你认为是愤世嫉俗,你可以说迄今为止的股票支持主要是由渠道中的东西驱动的。 我的意思是,最初我的意思是你们可以看到领先者的位置,因为你们是供应商。 但现在即将上线,你会看到股价压力。 所以我只是想估计一下即将上线的这种新花的风险是什么,你说,你会看到支持,我们应该能够推出零售店的新供应。 但我的意思是,一旦你在接下来的几个季度中对我们说话和更长的频道充满渠道,你有多自信。 我的意思是那里的钻机类似于你现在看到的软胶囊和油类,你将不得不在这些花朵上放置回收物品吗?

Mark Zekulin

Thanks Owen. We remain very confident. I think part of our effort to push product out early and obtain market share, wasn't strictly for the purpose of obtaining market share, it was for getting our brands out there and building that affinity that Rade was talking about, right.
So even with those brands, supply limitations meant certain inconsistency that would undermine that effort. But overall, there has been a huge push to make sure our brands are there and they are reliable and in some cases, we have divided brands into certain regions to ensure that continuity to build a customer loyalty for each brand.
So, we feel good about that. And I think the next step for us is to really make sure we now push a little bit further down into the TWD lineup to make sure that while we maintain that affinity and drive for the Tweed brand, DNA brand - all of those, we also really now push TWD compared that dominance in what we would call the good level.

谢谢欧文。 我们仍然非常自信。 我认为我们尽早推出产品并获得市场份额的努力的一部分并不是为了获得市场份额,而是为了让我们的品牌在那里并建立Rade所说的那种亲和力,对吧。

因此,即使对这些品牌而言,供应限制意味着某些不一致会破坏这种努力。 但总的来说,确保我们的品牌在那里并且可靠,并且在某些情况下,我们将品牌划分到某些地区以确保连续性以建立每个品牌的客户忠诚度。

所以,我们感觉很好。 而且我认为我们的下一步是确保我们现在进一步向下推进TWD阵容,以确保在我们保持这种亲和力并推动Tweed品牌,DNA品牌 - 所有这些,我们也 真正推动TWD比较我们称之为良好水平的主导地位。


Okay. Alright, thank you.

好的。 好的,谢谢。


Our next question comes from Brett Hundley from Seaport Global. Please go ahead.

我们的下一个问题来自Seaport Global的Brett Hundley。 请继续。


Hey good morning. And thank you for taking the question. So I hate to beat a dead horse here. But I just want to go back to the nature of discussions with regulators by province, particularly in Ontario and Quebec. When they talk about store footprint and build out, how mindful would you say they are of actually trying to keep page real time with oncoming supply across the industry and are there any other major concerns that they relate when discussing their speed at which they bring new stores to market, just because they really are moving - you know Ontario in particular really is moving slowly compared to other provinces and a number of U.S., states out there?

嗨,早安。 谢谢你提出这个问题。 所以我讨厌在这里击败一匹死马。 但我只想回到各省与监管机构讨论的性质,特别是在安大略省和魁北克省。 当他们谈论商店足迹和建立时,你会说他们实际上是否真的试图将页面实时与整个行业的即将到来的供应保持一致并且在讨论他们带来新的速度时是否有任何其他主要问题 商店进入市场,只是因为他们真的在移动 - 你知道安大略省与其他省份以及美国的许多州相比,特别是在缓慢发展吗?

Mark Zekulin

Yes, so I would say they are very student aware of the supply situation, I think Ontario and Quebec as provinces, regulating retail in the case - except Quebec operating retail. They are looking for supply to come on to meet demand across the product mix. And so our harvest of flower products in Q1 has allowed us to go to them with confidence. But what they want to see is results and those harvest existing and that is in a place we are today.
So we are now able to have those conversations and give them confidence that, one, both province in terms of any planned rollouts they have that we have the flower to support those rollouts, and two, for them to start looking out are their future waves and when do those waves come of additional rollout. I think in both of those provinces, you are starting to see based on [indiscernible] data, the percentage of overall retail sales across Canada is starting to more appropriately reflect the populations in those provinces.
An example I would give you is Ontario has significantly increased the percentage of retail sales from a national perspective, and is now at 30%, right. So there is way to go, it is 4% of the population at SKUs high in terms of disposable income. But that was only 25 stores.
You move up to 50 stores and more points of distribution and more communities in Ontario that are able to access retail cannabis sales, and I think you will see strong growth there. And I would say the same for Quebec.
And again, going back to what Mark spoke about, Alberta is in a place now where they are at about one store for every 30,000 people. Based on what we excepted Ontario and Quebec, they will be at about one store for every 185,000 people by the end of our fiscal year.
So there are significant rollouts plans. There are significant improvement in terms of point of distribution in turns sales. They have taken measured approach waiting for proof that power supplies online and we think we are at a place now where we are quite happily having those discussions and offering our support and quite pleased with the plans they have.

是的,所以我会说他们非常了解供应情况,我认为安大略省和魁北克省作为省份,在这个案例中规范零售业 - 除魁北克经营零售业外。他们正在寻找供应来满足整个产品组合的需求。因此,我们在第一季度收获的花卉产品让我们充满自信地去了他们。但他们想要看到的是结果和那些收获存在,而这正是我们今天所处的位置。







I appreciate that answer. And, it is got me thinking just as a follow-up here you know maybe as we think about not only you guys, but the broader industry and - that occurs with these regulatory bodies and store footprints opening across a number of these important provinces in the months and quarters ahead for you guys in particular. Do you have - well let me ask it this way, what is your view on willing financial partners to work with them and maybe taking some ownership and some type of sale leaseback transactions with regards to your production facilities going forward?

我很欣赏这个答案。 而且,这让我想到了这里的后续行动,你知道我们不仅可以考虑你们,而且更广泛的行业 - 以及这些监管机构和商店足迹在这些重要省份开放 特别是你们前几个月和几个季度。 你有没有 - 让我这样问一下,你对愿意与他们合作的金融合作伙伴有什么看法,并且可能会对你的生产设施进行一些所有权和某种类型的销售回租交易?

Mark Zekulin

Yes, thank you. So, we have in fact spoken about that before. It is something that we continue to examine, I would say for us, we do still have a lot of cash on the books and the plan to make sure that we use that prudently and are cash flow positive. So I think it is something we look at, and as we look at any sort of financing instruments, but we are not in a hurry, we will wait for the right opportunity.

是的,谢谢。 所以,我们事实上已经说过了。 这是我们继续审视的事情,我想对我们说,我们仍然有大量的账面现金以及确保我们谨慎使用并且现金流为正的计划。 所以我认为这是我们所看到的,当我们看到任何类型的融资工具时,我们并不着急,我们将等待合适的机会。


Thank you.



I will turn the call back to the presenters for some closing remarks.


Mark Zekulin

Okay. Well, thank you, everybody for joining for the questions. I hope it comes across that we remain very excited for the future. We are excited of what is happening in Canada. Excited of what is happening in the U.S., and globally. And to continue to get that balance of making the right investments for the future, while focusing on the effectiveness and efficiency of our operations. So, thank you very much and look forward I'm sure talking to as many of you during the course of the day. Thank you.

好的。 好的,谢谢大家加入这些问题。 我希望我们对未来感到非常兴奋。 我们对加拿大正在发生的事情感到兴奋。 对美国和全球正在发生的事情感到兴奋。 并继续为未来做出正确投资的平衡,同时关注我们运营的有效性和效率。 所以,非常感谢你,期待我在一天中确实和很多人交谈。 谢谢。


This concludes Canopy Growth first quarter fiscal 2020 financial results conference call. A replay of this conference call will be available until September 15, 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. Good bye.

这就结束了Canopy Growth第一季度2020财年财务业绩电话会议。 本次电话会议的重播将持续到2019年9月15日,并可按照公司今天早些时候发布的新闻稿中的说明进行访问。 感谢您参加今天的电话会议并享受您的一天剩余时间。 再见。


  • Canopy Growth Corp. 电话会议
  • Canopy Growth Corp. 财务报告


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