20:10:09 EDT Thu 28 Mar 2024
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or Name
USA
CA



Canopy Growth Corp
Symbol WEED
Shares Issued 394,422,604
Close 2022-04-26 C$ 6.82
Market Cap C$ 2,689,962,159
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Canopy Growth bites the bullet with cost-saving moves

2022-04-26 17:22 ET - News Release

Mr. David Klein reports

CANOPY GROWTH ANNOUNCES COST REDUCTION ACTIONS TO ACCELERATE PATH TO PROFITABILITY; STRATEGIC ADJUSTMENTS ARE EXPECTED TO GENERATE SAVINGS OF $100 - $150 MILLION WITHIN 12 - 18 MONTHS

Canopy Growth Corp. is undertaking a series of initiatives to reduce costs and drive efficiency in order to accelerate its path to profitability.

Aligned to Canopy Growth's fiscal year 2023 strategic review, the company is conducting the following actions:

  • Reducing cost of goods sold (COGS) in the company's Canadian cannabis business by lowering per-gram cultivation costs through increased cultivation-related efficiencies and facility improvements;

  • Implementing a flexible manufacturing platform inclusive of contract manufacturing for certain product formats;

  • Right-sizing indirect costs and generating efficiencies across the company's supply chain and procurement;

  • Aligning selling, general and administrative costs (SG&A) with short-term business expectations by reducing third party professional fees and office costs;

  • Further streamlining the organization to drive process-related efficiencies.

As a result of these challenging but necessary changes to the organizational structure, dedicated team members will be impacted as the company operates with a reduced head count moving forward. The Canopy management team wishes to acknowledge the efforts of these individuals during their tenure and thanks them for their contributions to the company.

"To realize profitability and power growth, we are taking critical actions to further evolve Canopy Growth into an agile organization with a clear focus on the areas where we have the greatest potential of success," said David Klein, Canopy Growth chief executive officer. "These necessary changes are being implemented to ensure the size and scale of our operations reflect current market realities and will support the long-term sustainability of our company."

"The savings and operational efficiencies generated through these additional steps reinforce our commitment to driving Canopy to profitability," shared Judy Hong, Canopy Growth's chief financial officer. "Achieving profitability in our Canadian business is critical to the success of our company and will ensure we can continue investing in our key strategic growth areas including U.S. THC to build significant long-term value."

Management expects to generate COGS savings of $30-million to $50-million and reduce SG&A expenses by $70-million to $100-million within 12 to 18 months. These savings are incremental to the previously announced cost savings of $150-million to $200-million, of which the majority have already been achieved. As a result of these strategic changes, management anticipates charges between $250-million to $300-million in the fourth quarter of fiscal year 2022, the majority of which will be non-cash and relate to the writedown of excess inventory balances as well as "property, plant and equipment" impairments. Further, the company expects to incur between $100-million to $250-million in non-cash impairment charges in Q4 fiscal year 2022, largely driven by goodwill and intangible asset impairments.

About Canopy Growth Corp.

Canopy Growth is a world-leading diversified cannabis and cannabinoid-based consumer product company, driven by a passion to improve lives, end prohibition and strengthen communities by unleashing the full potential of cannabis. Leveraging consumer insights and innovation, Canopy offers product varieties in high-quality dried flower, oil, softgel capsule, infused beverage, edible and topical formats, as well as vape devices by Canopy Growth and industry-leader Storz & Bickel. Canopy's global medical brand, Spectrum Therapeutics, sells a range of full-spectrum products using its colour-coded classification system and is a market leader in both Canada and Germany. Through its award-winning Tweed and Tokyo Smoke banners, Canopy reaches its adult-use consumers and has built a loyal following by focusing on top-quality products and meaningful customer relationships. Canopy Growth has entered into the health and wellness consumer space in key markets including Canada, the United States and Europe through BioSteel sports nutrition, and This Works skin and sleep solutions; and has introduced additional federally permissible CBD products to the United States through its First & Free and Martha Stewart CBD brands. Canopy Growth has an established partnership with Fortune 500 alcohol leader Constellation Brands.

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