Canopy Growth (TSX: WEED) this morning reported its fourth quarter results for fiscal 2022. Simply put, the company appears to be losing market share at a significant pace, while revenues continue to fall dramatically.
Revenues for the fourth quarter came in at $111.8 million, a 25% decline on a year over year basis as per the company, while also being a 20.7% decline on a sequential basis from the third quarter. Unsurprisingly, the company also missed analyst estimates for revenue, which on a consensus basis sat at $129.0 million.
On a segmented basis, recreational cannabis revenues declines from $47.8 million to $38.9 million, while medical cannabis revenues declined from $60.7 million to $52.0 million. International and other meanwhile dropped from $22.3 million, to $14.0 million. Consumer product revenue also fell, with revenues dropping from $58.0 million to $45.8 million.
Margins faired no better, with the company reporting a fourth quarter gross margin of negative 142%, versus 7% in the third quarter, and 7% in Q4 2021. Cost of goods sold amounted to an astounding $271.0 million during the quarter. Even when non-cash restructuring costs are excluded, costs of good sold still came in at negative 32%. Non-cash restructuring costs amounted to $119.0 million, while inventory charges amounted to $4.0 million.
The company also blamed the weak results on price compression and lower production output, along with increasing costs in shipping, distribution and warehousing in North America – effectively, any excuse that investors might possibly accept.
Operating expenses meanwhile totaled $370.4 million, led by asset impairment and restructuring costs of $241.1 million, and followed by selling, general and administrative expenses of $117.6 million. Overall, the company posted an operating loss of $529.6 million during the quarter.
After other expenses of $57.4 million, the company posted an overall net loss of $578.6 million for the quarter, or a loss of $1.46 per share.
On an annual basis, the firm saw revenues decline 4.1% to $582.2 million. Cost of goods sold came in at $713.4 million, resulting in negative gross margins of $193.1 million. With operating expenses of $889.6 million, of which $369.3 million was impairment and restructuring costs, the firm posted a total net loss for the year of $320.5 million, or a loss of $0.77 per share.
The company finished the year with $776.0 million in cash.
Looking forward, the company is once again reiterating that “achieving profitability is critical,” yet is seemingly getting nowhere close to that target. The firm is now expecting to be adjusted EBITDA positive in 2024, “excluding investments in BioSteel and US THC.”
“In the fiscal year ahead, we will remain focused on growing our market share in the key segments that will drive profitable growth and continuing to scale our premium brands across North America,” said CEO David Klein.
A firm outlook for 2023 was not provided.
Canopy Growth last traded at $7.12 on the TSX.
Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
